2021 is shaping up to be the “Year of the SPAC.”
So far this year, 176 SPACs have raised $49.5 billion, a huge leap from the 10 that raised $2.6 billion by this time last year. SPACs are outpacing traditional IPOs at a rate of three-to-one, and averaging 3.1 deals per day. At that rate, blank check IPOs would surpass 2020’s total by the end of the 1Q, and complete more than 1,000 offerings by year end.
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SPACs have seen a meteoric rise in popularity since the start of 2020. Historically focused on distressed industries, SPACs have recently shifted their targets to hot areas like disruptive tech, fintech, electric vehicles, and sustainability, boasting superior returns in the process. The IPO alternative has proven to be a viable way for a variety of other companies to enter the public market as well, from biotech to consumer goods.
Year-to-date, 56 companies have announced plans to list via SPAC merger, right in line with the number of traditional IPOs. Including the deals on file, an additional 500+ blank checks are looking for targets to acquire with more than $180 billion in combined cash; with SPACs regularly representing 8-20% of post-merger equity, these could to market companies worth $2+ trillion. In light of historic levels of demand from investors and rising returns, SPAC mania is alive and well in 2021.
