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July 20, 2020
Welcome to the SPAC Research weekly newsletter.

SPAC Research Podcast Appearance
You can catch SPAC Research Founder Benjamin Kwasnick talking about SPACs last week on the Market Huddle podcast with Kevin Muir and Patrick Ceresna. The segment begins at around 43:10.


SPAC IPO Pipeline
Seven new SPACs filed S-1's last week, bringing the total on file to 18. Those SPACs are looking to raise over $9bn (before over-allotment), and it's the largest SPAC IPO pipeline we've ever seen. Here's a summary of how much capital has been on deck to IPO since we started tracking it in Q3 of last year.
Bill Ackman's upcoming $4bn SPAC Pershing Square Tontine Holdings (PSTH) represents nearly half the current total. But even without PSTH we'd have a record amount on file.

The recent success of the SPAC product has brought in lots of new demand on both the front and the back end. So it's no surprise that issuers have rushed in to fill the void. But the amount on file is massive. Here's a chart for some context -- you can see that the $9.2bn currently on file to IPO will increase the amount of capital in active SPACs' trust accounts by nearly 30%!
We'll see in a month or so when 13Fs drop for the end of Q2, but recent price appreciation may have caused SPAC arb funds to be net sellers of the product. If so, that's likely freed up ample capital to deploy to new offerings and contributed to IPO demand right now. Meanwhile, of last week's seven new S-1's, six included warrant coverage of 1/3 or less and one included no warrants at all. So it appears the trend of declining warrant coverage is alive and well.

We've never seen so much paper issued all at once, so its fair to wonder what effect this crop of IPOs will have on the market. Historically, bankers have kept new issuance at a measured pace, collectively holding the number of SPACs on file somewhere between five and ten. But those bankers are the ones most in touch with front-end demand, and they're actively engaged in ensuring a stable book for each of their offerings. In opening the flood gates to new issuance, they're likely responding to what the market is telling them at the moment. We'll know more this week about how tight allocations were when we see how the upcoming group of IPOs trades in the open market.
SPAC Alpha
Our new platform SPAC Alpha released a report this week on the Tortoise Acquisition Corp. deal to acquire Hyliion Inc. See below.

News From the Past Week

IPOs and S-1's
  • Artius Acquisition Inc. (AACQ) raised $630mm in an upsized IPO to acquire a technology-enabled business. Artius is chaired by Charles Drucker, former vice chairman of Fidelity National Information Services (NYSE: FIS) and former CEO of Worldpay, a leading global payments company. CEO Boon Sim is managing partner of Artius Capital Partners and a former advisory senior director of Temasek, Singapore's sovereign wealth fund. Credit Suisse and Goldman Sachs are joint book-runners.
  • HPX Corp. (HPX) raised $220mm in an upsized IPO for an acquisition in Brazilian consumer goods and restaurants. HPX is co-chaired by Bernardo Hees, former CEO of Kraft Heinz (NASDAQ: KHC) and partner at 3G Capital, the Brazilian private equity firm that teamed up with Berkshire Hathaway to arrange the mega-merger between Kraft and Heinz in 2015. Hees also served as CEO of Burger King Worldwide during the hamburger chain's public market listing via Justice Holdings (formerly LSE: JUSH), Bill Ackman's first SPAC, in 2012. Credit Suisse is sole book-runner.
  • D8 Holdings Corp. (DEH) raised $300mm in an upsized IPO for an acquisition in the consumer sector. D8 is led by David Chu, the founder and CEO of Nautica from 1983 until its acquisition by VF Corporation (NYSE: VFC) in 2003. Chu has since served in roles for luggage brand Tumi, silverware manufacturer Georg Jensen A/S, and in partnership with golfer Jack Nicklaus' consumer brand. UBS is sole book-runner.
  • Malacca Straits Acquisition Co. (MLAC) raised $125mm to acquire a Southeast Asian business conglomerate. MLAC is led by Kenneth Ng, the founder of Ark Pacific Capital Management, a private equity fund manager investing in Asia Pacific with a focus on Greater China. BTIG is sole book-runner.
  • PTK Acquisition Corp. (PTK) raised $100mm for an acquisition in tech in North America. PTK is led by Peter Kuo, who has served as a co-founding partner of Canyon Bridge Capital Partners, a private equity firm, since April 2017. Chardan is sole book-runner.
  • Deerfield Healthcare Technology Acquisitions Corp. (DFHT) raised $125mm for an acquisition in healthcare. DFHT is led by Richard Barasch, Steven Hochberg, and Christopher Wolfe, who along with Deerfield Management, founded DFB Healthcare Acquisitions Corp. (DFBH) and DFP Healthcare Acquisitions Corp. (DFPH). DFBH raised $250mm in February 2018 and completed a business combination with AdaptHealth (NASDAQ: AHCO) in November 2019. DFPH raised $230mm in March 2020 and is currently seeking a business combination in healthcare. Deutsche Bank and UBS are joint book-runners.
  • Pershing Square Tontine Holdings, Ltd. (PSTH) upsized its IPO from $3bn to $4bn and will likely price this week.

  • Churchill Capital Corp IV (CCIV) filed to raise $1bn without a specific sector focus. CCIV brings back Michael Klein, Jay Taragin, and Glenn August, who serve as chairman, CFO & director, respectively, for Churchill Capital Corp III (CCXX), which raised $1.1bn in February 2020 and announced the $11bn acquisition of MultiPlan, Inc., a tech-enabled provider of healthcare cost management solutions, in July 2020. Klein also serves as chairman of Churchill Capital Corp. II (CCX), which raised $690mm in June 2019 and is currently seeking a business combination, and chaired Churchill Capital Corp. (CCC), which raised $690mm in September 2018 and acquired Clarivate Analytics Plc (NYSE: CCC) in May 2019. Citigroup is sole book-runner.

  • CC Neuberger Principal Holdings II (PCPL) filed to raise $600mm without a specific sector focus. PCPL is the second in a series of SPACs sponsored by Chinh Chu and Neuberger Berman, an investment management firm with over $300bn in AUM. The first, CC Neuberger Principal Holdings I, raised $414mm in April 2020 and is currently seeking an acquisition in fintech. Chu also founded Collier Creek Holdings (CCH), which raised $440m in October 2018 and is looking to close the $1.5bn acquisition of Utz Quality Foods later this year. He also co-founded CF Corporation (CFCO), which raised $690mm in May 2016 and acquired Fidelity & Guaranty Life (NYSE: FG) in Nov 2017. Credit Suisse, Citigroup, and Morgan Stanley are joint book-runners.

  • E.Merge Technology Acquisition Corp. (ETAC) filed to raise $500mm for an acquisition in software and internet technology. ETAC is chaired by S. Steven Singh, who was CEO of Concur Technologies from 1998 until it was acquired by SAP SE, a multinational enterprise software company, in 2014. Singh and Co-CEOs Jeff Clarke and Guy Gecht bring decades of executive and board experience for public companies in technology. Cantor Fitzgerald and Mizuho Securities are joint book-runners.

  • Health Sciences Acquisitions Corporation 2 (HSAQ) filed to raise $125mm for an acquisition in biopharma and medical technology, the second SPAC ever to file with no warrant coverage and exactly $10 in trust. HSAQ is led by Roderick Wong, MD, who has served as managing partner and CIO of RTW Investments, a healthcare-focused investment firm. Wong and much of HSAQ’s management team also led Health Sciences Acquisitions Corporation (HSAC), which raised $115mm in May 2019 and acquired Immunovant Sciences Ltd. (NASDQ: IMVT) in December 2019. HSAQ also sports a $25mm forward purchase agreement with its sponsor, HSAC 2 Holdings, LLC. Chardan and Barclays are joint book-runners.

  • Yucaipa Acquisition Corporation (YAC) filed to raise $300mm without a specific sector focus. YAC is led by Pittsburgh Penguins owner Ronald W. Burkle, who has also served as chairman and controlling shareholder of numerous companies in the retail, logistics and hospitality sectors including Pathmark Stores (NASDAQ: PTMK), Ralphs Supermarkets, Americold Realty Trust (NYSE: COLD), Eimskip Logistics (ICE: EIM), TDS Logistics, and Morgans Hotel Group (NASDAQ: MHGC). YAC has a $50mm forward purchase agreement with its sponsor, Yucaipa Acquisition Manager, LLC. Citigroup is sole book-runner.

  • BowX Acquisition Corp. (BOWX) filed to raise $350mm for an acquisition in TMT. BOWX is led by Vivek Ranadivé, founder of Bow Capital Management, an early-stage venture firm, and co-owner of the NBA's Sacramento Kings since 2013. Ranadivé is also a co-founder of TIBCO, an enterprise infrastructure software company that IPO'd in 2019 and was sold to Vista Equity Partners in 2014 for $4.3bn. UBS is sole book-runner.

  • Holicity Inc. (HOL) filed to raise $250mm for an acquisition in TMT. HOL is led by Craig McCaw, the founder and former leader of McCaw Cellular Communications, Clearwire Corporation, and Nextel Communications. Deutsche Bank and BofA are joint book-runners.

Deal Announcements, LOIs and Rumors
  • Spartan Energy Acquisition Corp. (SPAQ) announced a deal to acquire Fisker Inc, an eco-friendly developer of electric vehicles. The business combination values Fisker at a $2.9 billion pro forma equity value, assuming no redemptions. The transaction will provide more than $1bn in gross proceeds to Fisker, including a $500mm fully committed common stock PIPE at $10 per share anchored by investors including Moore Strategic Ventures, AllianceBernstein, BlackRock and Federated Hermes Kaufmann. Closing is expected in Q4 2020.
  • Fortress Value Acquisition Corp. (FVAC) announced a deal to acquire MP Materials, owner and operator of Mountain Pass, a rare earth metal mining and processing site in North America. The combined company will have an estimated post-transaction equity value of approximately $1.5bn with over $500mm in net cash assuming no redemptions. The transaction includes a $200mm fully committed common stock PIPE anchored by Slate Path Capital, Chamath Palihapitiya and Omega Family Office. Closing is expected in Q4 2020.
  • Bloomberg reported that Churchill Capital Corp II (CCX) is said to be in talks with Topgolf International Inc., an operator of golf driving ranges with a party atmosphere.


Broken Deal

  • Leisure Acquisition Corp. (LACQ) terminated the company's agreement to acquire Gateway Casinos & Entertainment. LACQ was allowed to terminate the deal if closing had not occurred by 7/15/2020. The company still has until 12/1/2020 to consummate a deal but only $13.2mm remains in trust.

Deal Closing

  • Leo Holdings Corp. (LHC) closed its acquisition of Digital Media Solutions on Wednesday 7/15/2020. Ordinary shares and warrants commenced trading on NYSE on Thursday, 7/16/2020 under the symbols “DMS” and “DMS WS.” No redemption count has been provided yet.


Charter Extensions

  • KBLM extended through 11/9/2020 with a $0.025 per share monthly contribution
  • INSU filed for an extension through 1/11/2021 with no sponsor contribution

Upcoming Meetings and Deadlines
  • 7/23/2020 BRPA Charter extension meeting (liquidation deadline 7/23/2020)
  • 7/23/2020 GRAF Charter extension meeting (liquidation deadline 7/31/2020)
  • 7/27/2020 TZAC Liquidation deadline
  • 7/29/2020 ANDA Charter extension meeting (liquidation deadline 7/31/2020)


Links
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