The SPAC market is showing new signs of life, with new blank check activity on track to hit a four-year high.
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Year to date, 12 blank check companies have priced, and 17 have submitted initial filings, continuing the pickup that started in the second half of 2024. The recent activity represents a significant jump from this point last year (3 pricings, 3 filings) and puts new SPAC issuance on track to surpass levels seen in 2019, which was a record year for the IPO alternative at the time.
The pickup comes amid generally improving market conditions, particularly for technology stocks, as well as some tailwinds in popular SPAC target areas like quantum computing, fintech and cryptocurrency, space and satellites, and nuclear and alternative energy.
Overall, the space is still plagued by high redemptions and poor post-merger returns, and most de-SPACs are underwater. Only ~15% of mergers from the past five years trade above the $10 offer price (or split adj. equivalent).
That hasn’t deterred new SPAC investors as of late, who have a guaranteed return due to their redemption rights. And while SPAC sponsors risk losing their upfront capital, rising returns for growth stocks and roaring demand for AI may have persuaded more sponsors to have a SPAC ready in case an early-stage AI company wishes to list quickly.
