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Illustration: Aïda Amer/Axios

The SPAC boom is beginning to show its first cracks, as several private equity-sponsored efforts have needed to downsize.

Driving the news: Cerberus yesterday shrunk the anticipated IPO for its telecom-focused SPAC from $400 million to $300 million.

  • Riverstone Holdings' third SPAC yesterday raised $200 million in its IPO, after downsizing from $300 million.
  • H.I.G. Capital filed to raise $450 million for a SPAC in late September, but on Thursday cut the proposed size to $325 million.
  • MPM Capital raised $85 million for its debut SPAC Thursday, after originally filing to raise $100 million.

To be sure, plenty of private equity-sponsored SPACs have continued to hit their targets, and some have even upsized. But the offering glut has let investors become a bit more choosy — if only for allocation reasons, given the relatively low upfront risk — and private equity is increasingly finding itself on the short end.

  • One banking source suggests that there are concerns that private equity prowess won't always translate to the public markets, particularly when put up against SPACs from hedge fund managers and former CEOs of listed companies.
  • Another adds that private equity investors focus mostly on their "day jobs," whereas the SPACs are viewed as opportunistic second fiddles.
  • Historical performance data on PE-backed SPACs vs. the pack is considered anachronistic, since the SPAC market has never before seen this sort of volume.

The bottom line: The SPAC space is evolving fast, and what's true today could be false tomorrow. But right now there's a flight toward sponsors that don't spend most of their time taking companies private.

Go deeper

Jan 26, 2021 - Economy & Business

Scoop: North Equity to acquire Domino Media

Photo by Donato Sardella/WireImage

North Equity, a venture equity firm that acquires and invests in media brands, is acquiring Domino Media Group, the home magazine and digital company launched by Condé Nast in 2005. The deal is expected to close this week. 

Why it matters: It's the latest example of a niche media brand being gobbled up and consolidated by a private equity firm. Private equity firms are typically less interested in editorial, and more interested in ways to better monetize a brand's value.

Massachusetts Gov. Charlie Baker will not seek re-election in 2022

Mass. Gov. Charlie Baker (R) speaking during a press conference in November 2021. Photo: Jonathan Wiggs/The Boston Globe via Getty Images

Massachusetts Gov. Charlie Baker (R), a moderate who typically ranks as one of the nation's most popular governors, said Wednesday that he and Lt. Gov. Karyn Polito (R) will not seek third terms in 2022.

Why it matters: The decision leaves the gubernatorial race wide open and will likely affect multiple down-ballot races next year. Baker was expected to be the front-runner had he joined the race.

3 hours ago - Health

CDC prepares tougher testing rules for international travelers

Travelers with their luggage arrive at a COVID-19 testing location at the airport in Los Angeles, Calif., on Nov. 23, 2021. Photo: Frederic J. Brown/AFP via Getty Images

The Centers for Disease Control and Prevention said Tuesday night that it is working to impose stricter testing requirements for international travelers due to the spread of the new Omicron variant.

The big picture: The new rules would require all international travelers, regardless of vaccination status, to show a negative test taken a day before their flight to the U.S. Currently, the CDC says fully vaccinated travelers are allowed to show a test taken no more than three days before their departure, AP reports.