Illustration: Annelise Capossela/Axios

The blank-check boom of 2020 is sapping the 2021 IPO market of prospective issuers.

Driving the news: SPAC godfather Alec Gores this morning announced the market's largest-ever deal, with Gores Holdings IV (Nasdaq: GHIV) agreeing to buy wholesale mortgage lender UWM at an enterprise value of approximately $16.1 billon.

What they're saying: Mat Ishbia, president and CEO of UWM, tells Axios that his company began preparing to go public about a year ago, and over time began to find the SPAC process "more efficient" than the IPO process.

  • "We first met with Alec and [Gores Group's] Mark Stone in March or April, and they made the decision easy," he says. "You only go public once and [we] want to ride shotgun with someone who's done it before."
  • Gores Group was formed as a buyout firm in 1987, but took Hostess Brands public via a SPAC in 2016. Since then it's raised several more, including the one buying UWM and another that last month raised $474 million.

The big picture: Several other companies that have agreed to SPAC deals this year would have otherwise attempted IPOs in 2021. Examples include DraftKings, Desktop Metal, and Opendoor.

  • One SPAC banker estimates that around half of the year's 42 announced deals are for 2021 IPO candidates.
  • There are currently 138 SPACs actively seeking targets, and another 49 that have filed to go public, per SPAC Research.
  • "SPACs are seductive, because they offer the benefits of going public without all the hassles of IPOs," explains an IPO adviser. "You basically trade off more dilution for speed, price certainty, and not having to interface much with Wall Street bankers."

One big question is at what point might new SPAC formation outpace attractive targets, particularly as IPOs themselves are becoming more flexible (direct listings, hybrid listings, etc.).

  • Some sources also speculate that the SPAC formation boom is driven, at least in part, by pandemic-driven difficulties in traditional fundraising. Unclear on what happens if business travel were to return to normal, or if this is a "toothpaste out of the tube" situation.

🎧 Coming attractions: Reid Hoffman and Mark Pincus, who recently raised $600 million for a SPAC called Reinvent Technology Partners, will join today's "Axios Re:Cap" podcast.

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Dan Primack, author of Pro Rata
Oct 7, 2020 - Economy & Business

FirstMark Capital raises a "full stack" SPAC

Illustration: Aïda Amer/Axios

Venture capitalists like to talk about "full stack" when it comes to software investments. Now, some are using it to describe themselves.

Driving the news: FirstMark Capital raised $360 million in an upsized IPO for its first SPAC, whose target universe will include portfolio companies of FirstMark's early-stage and growth-stage funds.

Deadly Hurricane Zeta slams Gulf Coast

A satellite image of Hurricane Zeta. Photo: National Hurricane Center/NOAA

Hurricane Zeta has killed at least one person after a 55-year-old man was "electrocuted by a downed power line" in Louisiana as the storm caused widespread power outages Wednesday night, per AP.

What's happening: Zeta made landfall south of New Orleans as a Category 2 hurricane earlier Wednesday before weakening to Category 1. But it was still "battering southeastern Louisiana and southern Mississippi with life-threatening storm surge, high winds, and heavy rain" late Wednesday, per the National Hurricane Center.

Updated 25 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Politics: Biden ahead in Wisconsin, Michigan as cases surge in the Midwest.
  2. Health: Fauci says U.S. may not return to normal until 2022 — Trump's testing czar: Surge "is real" and not just caused by more tests Some coronavirus survivors have "autoantibodies."
  3. Business: Consumer confidence sinking Testing is a windfall.
  4. World: Europe faces "stronger and deadlier" wave France imposes lockdown Germany to close bars and restaurants for a month.
  5. Sports: Boston Marathon delayed MLB to investigate Dodgers player who joined celebration after positive COVID test.