Last week, Liz blogged that the SPAC bubble was leaking. This week, S&P Global declared that the bubble has popped – and that SPACs have gone the way of tulips & dotcoms:
Even for a financial mania, SPACs didn’t last long. These highly speculative schemes have whipsawed from nowhere to everywhere and now back to nowhere – all in a matter of months. Live fast, die young.
Our obituary for the short-but-colorful life of special purpose acquisition companies (SPACs) is a bit facetious, of course. But there’s no denying, to use a metaphor favored by cynical Wall Streeters who have seen this sort of thing before, that the SPAC bubble is no longer being pumped up like it had been. Why the deflation? SPAC saturation.
In Q1, an average of more than 90 new US-listed blank-check companies each month successfully raised money from investors, according to S&P Global Market Intelligence. So far in April, the rate of issuance has plunged about 80%, with the full-month total tracking to just 14, our data indicates.
The article notes that instead of investors, the group that’s looking most closely at SPACs right now seems to be the SEC – and that’s a pretty clear signal “that a boom has gone bust.” That may be true when it comes to IPOs, but there’s a whole lot of money sloshing around in SPACs that are desperately chasing de-SPAC deals, so it’s likely that there’s another chapter in the SPAC boom story that has yet to be written.
-John Jenkins, TheCorporateCounsel.net April 28, 2021