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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

Dan Primack, author of Pro Rata
Jan 14, 2021 - Economy & Business

Petco IPO raises $817 million

Illustration: Aïda Amer/Axios

Petco, a San Diego-based pet supplies and services company owned by CVC Capital Partners and CPPIB, raised $817 million in its IPO.

Why it matters: The company priced above its expected range, $18 vs. $14–$16, reflecting how the public markets just can't get enough of companies that cater to the cuddly fuzzballs.

Kaine, Collins' censure resolution seeks to bar Trump from holding office again

Sen. Tim Kaine (center) and Sen. Susan Collins (right). Photo: Andrew Harnik/Pool via Getty Images

Sens. Tim Kaine (D-Va.) and Susan Collins (R-Maine) are forging ahead with a draft proposal to censure former President Trump, and are considering introducing the resolution on the Senate floor next week.

Why it matters: Senators are looking for a way to condemn Trump on the record as it becomes increasingly unlikely Democrats will obtain the 17 Republican votes needed to gain a conviction, Axios Alayna Treene writes. "I think it’s important for the Senate's leadership to understand that there are alternatives," Kaine told CNN on Wednesday.

Stark reminder for America's corporate leaders

Rosalind "Roz" Brewer is about to become only the second Black woman to permanently lead a Fortune 500 company. She starts as Walgreens CEO on March 15.

Why it matters: It's a stark reminder of how far corporate America's top decision-makers have to go during an unprecedented push by politicians, employees and even a stock exchange to diversify their top ranks.