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SPAC Talk

SPAC IPO market continues at a slow pace. The first seven weeks of 2024 have seen four new SPACs come to market. By comparison, there have been more than three times as many traditional IPO listings since the start of the year. On a more positive note, two of the three SPAC IPOs priced in February have been relatively sizeable offerings: Legato Merger Corp III (LEGT) generated gross proceeds of $201.25 million, while Helix Acquisition Corp II (HLXB) delivered $184 million in funds to its trust. Meanwhile, the SPAC IPO pipeline does not indicate a big rush back into SPACs is to be expected. There have been only three new S1 registration statements filed in 2024 to date, including HLXB, which was filed just one month prior to its pricing. The number of total live registrations stands at 33, about one-quarter of these (eight) seemingly collecting dust at more than two years old. IBC deal rush – a case of do or die? It has been more active on the IBC deal announcement front. Eighteen have been announced thus far in 2024. Twelve out of the 18 involve SPACs that were IPOed back in 2021. Consistent with the last couple of years, most of the latest announced deals are valued in the sub-$1 billion value range. Among them, however, are a couple of bigger deals. These include Quadro Acquisition One Corp’s (NASDAQ: QDRO) $3 billion IBC deal with a collection of seven companies, owned by entrepreneur Greg Lindberg, operating in the sports collectibles, software, cloud-based IT, and healthcare services segments under the collective name of Global Growth Companies and Global Link Investment’s (NASDAQ: GLLI) proposed $1.6 billion combination with Malaysian biotech company Alps Global Holding. In the wake of these, there are currently 113 SPACs still searching for IBC targets, of which more than half (63) are likely in the do-or-die stage, having been IPOed prior to 2022. De-SPACs remain out of favor. As US markets hit new all-time highs, the Bloomberg DESPACTR Index continues its two-year downward path, dropping another 15% year to date. As we pointed out in SPAC Talk: Back to the Peripheries or Ready for a Radical Remake (12/13/23), the scale of redemptions is a key bellwether for the appetite for de-SPACs. So far this year, 13 de-SPACs have been consummated (four in January and nine in February), but redemption rates remain high. The January de-SPACs averaged 99%, although there was a drop-off in February to 90%, not that it makes much of a difference to the de-SPAC big picture. After the Lord Mayor’s Show. The SEC has at last finalized the rules that it initially proposed almost two years ago. Our SPAC Talk Focus delves into the key aspects of the rules, highlighting key differences between the finalized rules and the initial proposals, and the key takeaways. Many of the proposals that have recently become established as rules have been implemented. The finalized rules may simply be a case of After the Lord Mayor’s Show.