U.S. SPAC Deals Surpass 2020 Levels In Less Than Three Months

In less than three months this year, initial public offerings (IPOs) of U.S. special purpose acquisition companies (SPACs) surpassed the $83.5 billion U.S. that the sector raised in all of 2020, according to data from SPAC Research.

SPAC listings so far this year also dwarf the $29.5 billion U.S. raised by traditional IPOs of companies that operate businesses as opposed to being empty shell companies such as SPACs.

The $200-million U.S. IPO of Build Acquisition on Tuesday of this week pushed the total raised by U.S. SPACs in IPOs above last year’s haul, which was already more than six times the previous all-time record.

The growth highlights the popularity of SPACs as an alternative vehicle to traditional IPOs. By merging with a SPAC, companies can debut in the stock market with forecasts and predictions that are not as regulated as they would be in traditional IPO roadshows.

Currently, 408 SPACs with $131.1 billion U.S. in cash are looking for companies to merge with.

Based on the rough rule of thumb that a SPAC typically merges with a company three to five times its size, this equates to potentially over $600 billion U.S. in purchasing power.

SPACs have gained immense popularity among retail traders as well as Wall Street fund managers that are hoping to ride the coattails of prominent investors launching them. Billionaire Bill Ackman, tennis player Serena Williams and former U.S. House Speaker Paul Ryan are
among the people who have raised money through SPAC deals.