Global SPAC deal volumes this year surpass total for 2020 By Reuters

By Patturaja Murugaboopathy

(Reuters) – Global blank-check deal volumes, or mergers through special purpose acquisition companies (SPACs), have surged to a record $170 billion this year, already outstripping last year’s total of $157 billion, Refinitiv data showed.

The record number of deals comes as SPACs are emerging as a popular IPO alternative for companies, providing startups with a path to going public with less regulatory scrutiny.

GRAPHIC: SPAC index vs SPX – https://fingfx.thomsonreuters.com/gfx/mkt/xklpyregmvg/spac%20index.jpg

The latest data showed companies targeted by SPACs have been primarily from the automobiles, software and aerospace sectors this year.

SPACs are shell companies that raise funds to acquire a private company with the purpose of taking it public, allowing such targets to sidestep a traditional initial public offering.

GRAPHIC: SPAC M&As – https://fingfx.thomsonreuters.com/gfx/mkt/bdwvkmgdlvm/spac%20ipos.jpg

They have gained in popularity in recent months, with investors increasingly looking to growth stocks for higher returns, and as the COVID-19 pandemic disrupted the traditional IPO process.

GRAPHIC: TOP 10 SPAC targets – https://fingfx.thomsonreuters.com/gfx/mkt/dgkplemwkvb/top%2010%20spac%20targets.jpg

The SPAC deals involving Lucid Motors, Alright Solutions, and Fertitta Entertainment Inc have been the largest by deal value this year, the data showed.

U.S. SPACs have raised $64.2 billion through IPOs so far this year, or 76% of the total equity raised by IPOs in the market.

GRAPHIC: SPAC vs Equity IPOs comparison – https://fingfx.thomsonreuters.com/gfx/mkt/oakpelgagvr/SPAC%20vs%20equity%20ipos.jpg

However, the shares of SPAC companies have slumped recently on concerns their valuations have become inflated, amid a rise in U.S. Treasury yields.

GRAPHIC: Money raised through listing by SPACs – https://fingfx.thomsonreuters.com/gfx/mkt/yxmvjwglepr/IPO%20countrywise.jpg

The IPOX SPAC Index, which tracks the performance of listed SPACs, has fallen over 12.5% in the past month, compared with the broader index’s decline of 2.4%.

GRAPHIC: SPAC deals by sectors – https://fingfx.thomsonreuters.com/gfx/mkt/qmyvmrmgqpr/SPAC%20Sectors.jpg