Some of the blank-check world’s shrewdest sponsors are pulling new offerings amid miserable returns for the sector and mounting signs of investor exhaustion.
Dealmakers aborted at least 14 planned listings this month alone for so-called special-purpose acquisition companies that were looking to raise a combined $4 billion, according to data compiled by Bloomberg. Both figures are records for the once red-hot asset class.
“Even among the higher-caliber people, too much money has already been raised,” said Greg Martin, managing director and co-founder of Rainmaker Securities. “The SPAC craze is over; I think we’re going to have a tremendous compression of the number of SPACs that go public.”
Ranks of the newly cautious include serial sponsors like James Carpenter’s Riverside Management Group, which pulled three deals in quick succession this month, as well as a SPAC from dealmaker Martin Franklin and billionaire Noam Gottesman. Celebrity endorsements didn’t always help, either; a SPAC that counted former New York Giants quarterback Eli Manning as an adviser was one of this week’s casualties.
It’s no wonder, given this month’s brutal correction in more established stocks and the carnage among blank-check companies since the sector peaked just about a year ago. The IPOX SPAC Index is down roughly 43% since mid-February, while the De-SPAC Index, which tracks blank checks that fulfilled their destiny by acquiring a business, suffered a 67% drubbing.
SPAC Surplus
And it’s not like there’s any shortage of SPACs that needs filling. Nearly 600 that already went public are still looking for something to buy, and over 240 more would-be listings are in the hopper, according to data compiled by SPAC Insider.
The roster of withdrawals isn’t limited to any particular industry or area of expertise.
TCG Growth Opportunities Corp., a firm backed by former News Corp. executive and media mogul Peter Chernin, withdrew plans for a $250 million IPO Tuesday. Fast-food veteran Clifford Hudson’s Do It Again Corp. has spiked plans to raise $125 million. Brand Velocity Acquisition Corp., a SPAC focused on consumer products where Eli Manning is an adviser, dropped out on Wednesday.
The planned $450 million SPAC from Franklin and Gottesman, N2 Acquisition Holdings Corp., was withdrawn on Jan. 21. The three withdrawn Riverside SPACs were seeking to raise $1.7 billion combined.
Representatives for the various firms didn’t immediately respond to messages seeking comment.
Investors can expect more sponsors to put IPOs on ice, according to industry watchers, as the once-popular vehicle falls out of favor. It doesn’t help that existing SPACs on the verge of completing their combinations with their target companies are finding investors reluctant to stick around. A rising percentage of holders are exercising their right to swap out their shares for cash, instead of letting their money ride with the newly merged company.
—With assistance from Ben Scent.
This article was provided by Bloomberg News.