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Illustration: Eniola Odetunde/Axios

There's been more than $125 billion in special purpose acquisition company, or SPAC, merger activity this year, more than quadrupling the 2019 total. And it's only expected to accelerate in 2021.

Driving the news: Three new SPAC mergers were announced in the past 24 hours, totaling over $3.6 billion, all in the vehicle space. Plus, nine new SPACs priced IPOs, raising a combined $2 billion.

The big picture: Both supply and demand are overflowing — hundreds of unicorns and even more near-unicorns with more than 225 SPACs are actively seeking targets.

  • Then throw in a deep-pocketed group of active PIPE investors, albeit a few who've gotten more selective of late, new SPAC formations each day, and a vibrant leveraged loan market.

What we don’t know is if this is sustainable.

  • Everyone’s jumping into the pool now, including VC firms in a show of buyout envy reciprocity, but this isn’t anyone’s core business — except, maybe, Michael Klein. If there’s some sort of regulatory crackdown from President-elect Biden’s SEC or a few big blowups scare off new investors from blank-check IPOs, then the SPAC market could shrink as fast as it expanded.
  • Bankers say they aren’t worried because there’s so much variety in what SPACs ultimately buy. And there’s some truth to that, but there’s been a very heavy concentration so far in the conceptual EV/AV space.

Between the lines: It's long been said that private markets follow public markets. In 2020, however, the reverse has been true.

  • Public equities investors act like venture capitalists, eschewing current fundamentals for five-year TAM projections.
  • And, with SPACs, they are buying into blank check structures that mimic buyout funds, albeit with worse LP economics and no portfolio diversity.

The bottom line: It's the new normal — for now.

Go deeper

Miriam Kramer, author of Space
Jan 26, 2021 - Science

Investment in the space industry overcame the pandemic's headwinds in 2020

A SpaceX launch in 2020. Photo: SpaceX

Investment in the space industry continued to grow in the last quarter of 2020, despite the coronavirus pandemic, according to a new report from Space Capital.

Why it matters: The space industry turned out to be far more robust in the face of the pandemic than many experts were initially expecting.

Sen. Sheldon Whitehouse under scrutiny for elite club affiliations

Sen. Sheldon Whitehouse during a Senate hearing on Capitol Hill in February. Photo: Susan Walsh-Pool/Getty Image

Sen. Sheldon Whitehouse (D-R.I.) said in a statement Wednesday that he is a member of an exclusive Rhode Island sailing club that lacks diversity.

Why it matters: Whitehouse has repeatedly spoken out against systemic racism and come under scrutiny this week for his family's affiliation with elite clubs. This is the second such club accused of lacking diversity that the senator has been linked to in recent days

3 hours ago - Politics & Policy

Scoop: Border Democrats want migrants vaccinated

Rep. Filemon Vela (D-Tex.) Photo: Chip Somodevilla/Getty Images

Some Democrats representing border districts want President Biden to vaccinate migrants crossing into the U.S. — especially if he lifts public health restrictions that have prevented them from claiming asylum on American soil.

Why it matters: Inoculating migrants treads a fine line of protecting the U.S. population while possibly incentivizing more migration with the offer of free COVID-19 vaccines. Republicans are likely to pounce on that.