SPAC Talk
We have a whopper! For more than a year, we have been noting how IBC deals have been getting smaller. While there have been four $1 billion-plus deals announced so far in 2023, in terms of size, we have not seen anything like the $27 billion pre-money value for the proposed SPAC IBC merger that was announced at the end of last week by SPAC Black Spade Acquisition Co. (BSAQ) and privately held VinFast Auto, a Vietnamese manufacturer of EVs, since the peak of the SPAC euphoria in 2021. In fact, this transaction happens to be the third-largest SPAC merger deal in history behind MSP Recovery (LIFW) in July 2021 (TEV $32.6 billion) and Grab (GRAB) in April 2021 (TEV $31.3 billion). Excluding the BSAQ/VinFast Auto transaction, the average value of the eight other proposed IBCs announced this month is just $337 million or one-hundredth of the VinFast transaction value. We present further thoughts on this deal in our SPAC Talk Focus. The SPAC universe continues to shrink. As we reach the midpoint of May, 17 liquidations have occurred or are scheduled to occur, surpassing the 15 in April. There is also one liquidation set for June. This takes the SPAC liquidation count to 104 in 2023, with the return of cash from trust funds amounting to ~$30 billion versus 145 and $48 billion in 2022. The number of SPACs searching for IBCs continues to shrink and currently stands at 248 (net of SPACs that have elected to liquidate), the lowest count since December 2020. Bombed-out de-SPACs. The picture is not getting any brighter for de-SPACs. The penny stock count among de-SPACs continues to rise. As of writing, a record 113 (or 36%) of 318 companies that have de-SPACed since the start of 2021 are trading below $1. Moreover, historical investment returns measured by median returns since 2009 can only be described as awful. In this respect, de-SPACs have generated significant double-digit negative returns across all sectors save the industrial sector, which has proved to be the only sector that has produced overall positive returns from de-SPACs over the past 15 years.
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