SPACs thrive as most IPOs wither
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Illustration: Annelise Capossela/Axios
SPACs are capital markets cockroaches, surviving and even thriving when most other offerings have withered.
The big picture: April has been a very busy month for the blank-check biz, which many had forgotten about since its 2021 boom and subsequent bust.
- There have been 16 new SPAC IPO filings, including from market vets Alec Gores and Michael Klein, plus another 11 IPOs that priced.
- Nine new deSPAC transactions were announced, while Webull and two others closed.
Zoom in: The simplest narrative is that SPACs are rushing in where traditional IPO issuers fear to tread.
- Yet that doesn't entirely track. Yes, lots of expected IPO issuers hit the brakes after "Liberation Day," but it's not like they were rushing to market in 2023 or 2024 — two years in which SPAC IPO volume was relatively light.
Behind the scenes: Perhaps a larger factor is that the SPAC sponsors and investors seem to have finally worked through most of their 2021 and 2022 overhang, and are ready for new business.
- Remember, lots of institutional investors have SPAC allocations, given that it's more opportunity risk than principal risk (so long as someone's paying attention to redemption windows).
- There's also a growing belief that the valuation correction could foment new deal opportunities, and relief that some recent merger announcements have included recognizable names and sizable slabs of common stock financing.
- Finally, there are fewer worries about SEC enforcement.
Yes, but: Bulge bracket banks are mostly sitting on the sidelines.
- Nowhere is this more glaring than on Churchill Capital X, the new effort from ex-Citi dealmaker Klein.
- Citi has underwritten past Churchill IPOs, often with Wall Street peers also aboard, but this time the only listed bank is BTIG.
The bottom line: SPACs don't care what you think about them, so long as the cash keeps flowing.
