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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.

Dion Rabouin, author of Markets
37 mins ago - Economy & Business

The digital dollar is now high priority for the Fed

Illustration: Aïda Amer/Axios

The U.S. is starting to get serious about a central-bank-backed digital currency, with recent comments from top officials laying out the strongest support yet.

Driving the news: On Tuesday Fed chair Jerome Powell told Congress that developing a digital dollar is a "high priority project for us," but added that there are "significant technical and policy questions."

Dan Primack, author of Pro Rata
2 hours ago - Economy & Business

Coinbase files to go public

Illustration: Eniola Odetunde/Axios

Cryptocurrency exchange Coinbase on Thursday filed to go public via a $1 billion direct listing.

Why it matters: This comes in the midst of a crypto boom, and the listing may further legitimize the industry.