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Past Newsletters

March 18, 2019
Welcome to the SPAC Research weekly roundup, a collection of SPAC news from the last week.

Accounting League Tables
Don't miss our newest feature, accounting league tables. You can click individual firms to see an enumeration of deals they've worked on.

Pre-Business Combination Performance
This week we took a look at the annualized unit return for SPACs with IPOs between 2015 and 2018. The chart below assumes a simple quantitative strategy of buying $10 units at IPO, redeeming for cash in trust at business combination (unless common shares are trading above cash in trust) or liquidation, and selling any derivative components at the closing date. SPACs currently seeking a business combination are calculated to present value of components. The returns are weighted by both capital raised at IPO and by the amount of time a SPAC spent pursuing a business combination.
Capital invested in 2015-2018 SPAC IPOs has effectively produced a 7.6% annual return under this strategy.

The $400mm+ category is the clear leader at 10.8%, even if you remove Silver Run I (which produced a 146.73% annualized return), whose omission would bring it down to 7.4%. Sponsors who can raise the largest amounts of capital at IPO have had a greater likelihood of bringing a deal that the market is willing to pay at-or-above cash in trust for.

Also of note is the elevated return for smaller size SPACs, many of which offer rights, shorter time frames, or additional cash in trust. However, liquidity often presents some impediment to trading in these issues.

Meanwhile, here's a look at the top 10 unit return performances from IPO to business combination for 2015-2018 SPAC IPOs.
SPACs wanting to make this list need to close quickly. The top 3 all took less than a year, and everybody in the top 10 took less than a year and a half.
IPOs and S-1's
  • 13 SPACs have raised $3.06bn so far in 2019, as compared to $1.4bn raised by non-SPAC IPOs. SPACs are 40% ahead of last year's record pace, and showing no sign of slowing down with two more pricings likely this week (Insurance Acquisition & 8i Enterprises Acquisition)
  • Trine Acquisition Corp. (TRNE) raised $261mm in an upsized IPO, for a TMT or consumer related acquisition. Trine is led by Leo Hindery, Jr., managing partner of InterMedia Partners, former Chairman & CEO of The Yes Network, and former CEO of AT&T Broadband.
  • B. Riley Principal Merger Corp. (BRPM) filed to raise $125mm for an acquisition of an established business. B. Riley has underwritten seven SPACs since combining with FBR & Co. in 2017, and now joins prolific SPAC underwriters Cantor Fitzgerald and Chardan in sponsoring its own SPAC.
  • Replay Acquisition Corp. (RPLA) filed to raise $250mm for an acquisition in Argentina and/or Brazil. Credit Suisse and BofAML are joint book-runners.
Deals Closed
  • Union Acquisition Corp. (LTN) closed their business combination with Bioceres on 3/14/2019. The closing was originally expected on 3/4/2019, and shares exhibited volatile trading in the interim. Approximately $117mm of the $118mm held in trust was returned to redeeming shareholders.
  • Platinum Eagle Acquisition Corp. (EAGL) closed their business combination with Target Hospitality on 3/15/2019. Shares and warrants will commence trading on the NASDAQ under symbols "TH" and "THWWW," respectively. No redemption count has been provided in connection with the approval meeting.
Post-Combination News
  • US Well Services (NASDAQ: USWS) (formerly Matlin & Partners Acquisition) announced a tender offer to exchange all outstanding public (half-share) warrants for 0.13 common shares per warrant. Based on USWS closing price Friday of $8.44, the implied exchange value is approximately $1.10.
  • Labaton Sucharow LLP filed a class action lawsuit against Alta Mesa Resources (NASDAQ: AMR) (formerly Silver Run II), on behalf of investors who held SRUN common stock as of the record date on 1/22/2018, alleging misleading statements about the quality of assets acquired in the business combination.
Upcoming Events This Week
  • Constellation Alpha Capital Corp. (CNAC) will hold a meeting on 3/21/2019 to extend the date by which they must consummate a business combination from 3/23/2019 until 9/23/2019. No monthly contribution has been declared. Constellation Alpha also announced on 3/15/2019 that they have signed a non-binding LOI to merger with DermTech, a molecular genomics company with an initial focus on skin cancer.
  • Bison Capital Acquisition (BCAC) will hold a meeting on 3/21/2019 to secure an extension from 3/23/2019 until 6/24/2019 to close their business combination with Xynomic Pharmaceuticals. If approved, Xynomic will contribute $0.02 per month for each remaining public share during the extension period.
  • As noted last week, MTech Acquisition Corp. (MTEC) filed a preliminary proxy on 1/25/2019 indicating they intended to hold a shareholder meeting on 3/12/2019 to approve their business combination with MJ Freeway. A definitive proxy was never filed, and MTech has yet to release any new information regarding the status of the meeting or the intended merger. In addition, the deal can be terminated by either party now that closing has not occurred by 3/15/2019.

Disclosures: Site administrators are long CCC, CCC.U, CCC/W, FLMNW, HYAC, HYACW, ROSE, TRNEU, BIOX, BIOX/W, EAGL, EAGLW, CNACW, CNACR, BCACW, BCACR, MTECW, AMR 7.875% bonds expiring 2024, and short HFFG and may trade in or out of positions in these or other SPAC securities at any time. Nothing on is a solicitation to buy or sell any investment.