Despite the fact you might not hear about them as much, the SPAC market is still very much so alive. But alive and well? That might be a stretch.
The IPOX SPAC index traded at YTD lows this week. Demand for SPACs has chilled, with some deal makers now seeking capital commitments to help finish their fundraising.
For small deal-makers, raising capital or finding a company willing to merge has gotten more and more difficult. In order to attract investors, new SPACs are putting themselves on a more aggressive schedule to entice a merger. However, it’s hard to know if a shorter schedule will make any difference. After all, over 700 SPACs are on the clock to pull a company into their orbit as of this week.
And even though larger deal-makers have better luck and the benefit of PR on their side? Nothing is a done deal. A number of post-deal SPACs have dropped aggressively lately, after failing to meet the expectations they set for analysts. Among them are companies such as $APPH and $SOFI.
In the worst case scenario, a number of post-deal SPACs have listed… and then imploded. One SPAC listing lost 54% of its value after its merger was finalized and then revised earnings estimates significantly lower after their first report. The SPAC’s sponsors, Fortress and Advent International, have posted significant losses as a result.