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October 5, 2020
Welcome to the SPAC Research weekly newsletter.


DeSPAC Advisor Tables
Our DeSPAC Advisor and DeSPAC Legal Advisor tables can now filter for advisors on pending deals as well as for deSPACs back to 2017.


Record Issuance and Venture Capital Deal Flow
Eighty SPACs raised more than $32bn in Q3 2020, an eye-popping number that was nearly four times the amount of issuance in Q2, the previous quarterly record.
Lots of well-regarded sponsors raised SPACs and many deals traded materially above trust on announcement which supported the price of shares and warrants without an announced transaction. All of which brought many new investors into the product for the first time.
At quarter's end there was more than $60bn in SPAC trust accounts, and over sixty SPACs in the IPO pipeline looking to raise more than $17bn. For context, the pipeline of SPACs on file to IPO right now is approximately the same size as the entire investible SPAC universe was at the beginning of 2019.

Meanwhile, the trend we explored in July of generalist SPACs dominating the market has continued. Half of all capital raised by SPACs this year has gone to teams without a specific focus. And sector specialists outside TMT and consumer represent a rapidly shrinking slice of the overall pie.
Much of the generalist capital has gone to mega-SPACs. SPACs sponsored by Bill Ackman, Michael Klein, Bill Foley and Chinh Chu have collectively raised over $11bn this year, meaning just four sponsor groups -- all without a specific sector focus -- have done more than 20% of the year's total fundraising. Also of note: nine SPACs (categorized above as either General or Energy) with a focus on sustainability, renewables, or something else within the ESG spectrum, have raised $2.6bn this year.

We also saw 35 deals announced in Q3 worth over $73bn in the aggregate, (as measured by enterprise value of the target, based off of a $10 share price). We've explored the size of the target universe before, but the chart below adds some perspective.
We've previously written about the correlation between enterprise value and stock performance for SPAC deals. So it's no surprise that sponsors are shooting for bigger targets in general.

Below, you'll find one more look at the most recent quarter in context. Part of the SPAC story right now is access to venture capital-style deal flow. In a world with zero interest rates and low GDP growth, investors have been exuberant about companies with large expected revenue growth rates.

But with large revenue growth comes valuation on a revenue multiple and a high degree of sensitivity to hitting revenue estimates. You can see below that 23 of this quarter's 35 deals were either pre-profitability or pre-revenue.
Hopefully the current crop of SPAC targets is able to deliver on expectations. Venture capital is known for being willing to accept a high failure rate at the fund level, as long as it can lock in a few tremendously successful outcomes. But venture investments typically start at much lower valuations and it's much more challenging to earn a 100x outcome if a company's starting valuation is $1bn. Given that public market investors can't afford to have 50% of their portfolio go to zero, they should be watching this phenomenon carefully.


News From the Past Week
New S-1's
  • CONX Corp. (CONX) filed to raise $1bn for an acquisition in TMT, including wireless communications. CONX is chaired by Charlie Ergen, the founder, chairman, and former CEO of DISH Network, a direct-broadcast satellite TV provider with over $12bn in revenue last year. CEO Jason Kiser has served as treasurer of DISH since 2008 and has worked alongside Ergen for 30 years. CONX has a super-voting class of founder shares that are entitled to 10 votes per share and as a result, Ergen will be able to exercise control over matters requiring stockholder approval, including a business combination. Deutsche Bank is sole book-runner.
  • Atlas Crest Investment Corp. filed to raise $500mm for an acquisition in leisure, gaming and hospitality. Chairman Kenneth Moelis is chairman and CEO of Moelis & Company, a global financial advisory firm. CEO Michael Spellacy is the former global industry leader of Accenture Capital Markets and oversaw Accenture's asset management and trading businesses. Cantor Fitzgerald is sole book-runner.
  • Horizon Acquisition Corporation II (HZON) filed to raise $500mm for an acquisition in media and entertainment. CEO Todd Boehly is the CEO of Eldridge Industries, a holding company with ownership stakes in businesses across various sectors. Boehly and VP Robert Ott serve in similar roles for Horizon Acquisition Corporation (HZAC), which raised $544mm in August 2020 and is seeking an acquisition in financial services. Director Jason Robins is the chairman, co-founder and CEO of DraftKings, Inc. (Nasdaq: DKNG), which was acquired by Diamond Eagle Acquisition Corp. (DEAC) in April 2020 (and whose $100mm funding round from 2017 was led by Eldridge). HCON's sponsor intends to make a $155mm anchor investment in the SPAC's IPO. Deutsche Bank is sole book-runner.
  • H.I.G. Acquisition Corp. (HIGA) filed to raise $450mm without a specific sector focus. HIGA is led by Brian Schwartz, co-president of H.I.G. Capital, a private equity and alternative asset manager with over $40bn in AUM. Credit Suisse, Morgan Stanley, and BofA are joint book-runners.
  • Cerberus Telecom Acquisition Corp. (CTAC) filed to raise $400mm for an acquisition in information and communications technology. Chairman Frank Bruno is co-CEO of Cerberus Capital Management, a private equity firm with over $45bn under management. CEO Timothy Donahue is the former CEO of Nextel Communications, which he led from 1999 until Nextel's 2005 acquisition by Sprint. Bruno and Donahue both served as directors of Iron Horse Acquisition Corp. which filed to raise $300mm in January 2018 and withdrew its registration later that year. Morgan Stanley and Deutsche Bank are joint book-runners.
  • Northern Star Acquisition Corp. filed to raise $300mm for an acquisition of a consumer-facing business focused on content, products and services for the sharing economy. Sponsor and President Jonathan Ledecky is a co-owner of the NHL's New York Islanders and his SPAC history includes leading Pivotal Investment Corporation II (PIC) which raised $230mm in July 2019 and announced a business combination with XL Fleet, a vehicle electrification provider, earlier this month. Ledecky also led Pivotal Acquisition Corp. (PVT), which raised $200mm in February 2019 and combined with KLDiscovery (OTC: KLDI) in December 2019. NSAC Chairperson and CEO Joanna Coles is the former chief content officer of Hearst Magazines and sits on the boards of both Snap Inc. (NYSE: SNAP) and Sonos, Inc. (NASDAQ: SONO). Coles will lead the second majority-female board of directors from the past few years of SPAC IPOs. Citigroup is sole book-runner.
  • DPCM Capital, Inc. (XPOA) filed to raise $250mm for an acquisition in technology. CEO Emil Michael is the former chief business officer of Uber Technologies (NYSE: UBER) and has built multiple successful tech companies. Former Google CEO Eric Schmidt will serve as special advisor to the company. UBS is sole book-runner.
  • Spartacus Acquisition Corporation (TMTS) filed to raise $250mm for an acquisition in TMT. Chairman and CEO Peter Aquino served as chairman, president, CEO and director of several TMT companies including RCN Corporation (formerly NASDAQ: RCNI). The SPAC is co-sponsored by The Miller Family Office and CCUR Holdings, Inc., both TMT-focused groups with 30+ years of investment history in the TMT industry. B. Riley is sole book-runner.
  • Lefteris Acquisition Corp. (LFTR) filed to raise $225mm for an acquisition in fintech, with an emphasis on disrupting traditional financial services businesses. The SPAC is chaired by Mark Casady, co-founder and chairman of the advisory board of Vestigo Ventures, a venture capital firm that focuses on investing in early-stage fintech companies. CEO Karl Roessner is the former CEO of E*TRADE Financial Corp. (NASDAQ: ETFC). Morgan Stanley is sole book-runner.
  • KINS Technology Group Inc. (KINZ) filed to raise $200mm for an acquisition of a transformative technology business. KINZ is led by Khurram Sheikh, founder & CEO of Aijaad, a boutique strategic advisory firm focused on the future of 5G, IoT, Edge Computing and AI technologies. Sheikh was also the CEO of kwikbit, a private company building a "network as a service" solution using gigabit radios, edge compute, virtualization and AI. UBS and Stifel Nicolaus are joint book-runners.
  • SCP & CO Healthcare Acquisition Company (SHAC) filed to raise $200mm for an acquisition in healthcare. CEO Scott Feuer and President Bryan Crino, are both managing directors of the SPAC's sponsor, SCP & CO (formerly Skyway Group Private Equity), a Tampa-based private investment group focused on healthcare, technology, human capital and commercial real estate. Barclays and Piper Sandler are joint book-runners.
  • Tastemaker Acquisition Corp. (TMKR) filed to raise $200mm for an acquisition in restaurants, hospitality, and related technology and service sectors. TMKR is led by co-CEOs David Pace and Andrew Pforzheimer. Pace has led multiple public restaurant companies, including Red Robin Gourmet Burgers (NASDAQ: RRGB), Jamba, Inc. (NASDAQ: JMBA), and Bloomin' Brands (NASDAQ: BLMN). Pforzheimer co-founded restaurant brands Barcelona and Bartaco, which he sold to Del Frisco's Restaurant Group (NYSE: DFRG) for $325mm in 2018. The team includes CFO Christopher Bradley and Director Andrew Heyer, who have served as CFO and president, respectively, of both Haymaker SPACs. Stifel Nicolaus is sole book-runner.
  • Duddell Street Acquisition Corp. (DSAC) filed to raise $175mm for the acquisition of a company in the TMT, healthcare, fintech and consumer sectors with compelling Asian growth potential. DSAC is led by Manoj Jain and Sohit Khurana, co-founders of Maso Capital, a Hong Kong-based multi-strategy investment manager. BofA is sole book-runner.
  • Sarissa Capital Acquisition Corp. (SRSA) filed to raise $175mm for an acquisition in healthcare. SRSA is led by Alexander Denner, founding partner of Sarissa Capital Management, an activist healthcare and biopharma hedge fund. Denner and SRSA Senior Managing Director Mark DiPaolo previously served in senior positions at Icahn Capital, the investment firm of billionaire Carl Icahn, where they worked together on healthcare activist campaigns on behalf of investors. Cantor Fitzgerald is sole book-runner.
  • EdtechX Holdings Acquisition Corp. II (EDTX) filed to raise $150mm for an acquisition in education technology. Chairman Charles McIntyre and CEO Benjamin Vedrenne-Cloquet served in similar roles for EdtechX Holdings Acquisition Corp. (EDTX), which raised $64mm in October 2018 and acquired Meten Education (NASDAQ: METX) in March 2020. The SPAC is sponsored by IBIS Capital, a specialist investment and corporate finance advisory business specializing in digital disruption across the media, education and healthcare sectors. Jefferies is sole book-runner.
  • BCLS Acquisition Corp. (BLSA) filed to raise $125mm for an acquisition in healthcare. Chairman Adam Koppel and CEO Jeffrey Schwartz are co-founders and managing directors of Bain Capital Life Sciences, a life sciences investment manager with over $2.2bn of assets under management. The SPAC features zero warrant coverage and includes a $25mm forward purchase indication from its sponsor. Goldman Sachs and Jefferies are joint book-runners.
  • Helix Acquisition Corp. (HLXA) filed to raise $100mm for an acquisition in healthcare and related industries. HLXA is led by Bihua Chen, founder and managing member of Cormorant Asset Management, a life sciences-focused investment firm with over $2bn in AUM. HLXA's sponsor has indicated an interest to purchase $25mm of shares at the closing of a business combination. Jefferies is sole book-runner.
  • Turmeric Acquisition Corp. (TURM) filed to raise $100mm for an acquisition in biotechnology with an emphasis on oncology and rare disease therapeutics. Chairman Matthew Roden and CEO Luke Evnin are executive partner and co-founder of MPM Capital, a healthcare investment firm that founds and invests in life science companies seeking to translate scientific innovations into cures for major diseases. TURM's sponsor and affiliates have indicated an interest for a forward purchase of up to $15mm of shares at the closing of a business combination. Credit Suisse and JMP Securities are joint book-runners.

Deal News
  • Oaktree Acquisition Corp. (OAC) announced a deal to acquire Hims, Inc., a direct-to-consumer telehealth company. The deal reflects an enterprise value of $1.6bn, or 8.9x estimated 2021 revenue, and includes a $75mm PIPE led by Franklin Templeton and clients of Oaktree Capital Management. Hims management and existing equity holders will roll nearly 100% of their equity and the transaction is expected to close in Q4 2020.
  • Novus Capital Corporation (NOVS) announced a deal to acquire AppHarvest, a developer and operator of large-scale, high-tech controlled environment indoor farms. The deal reflects an enterprise value of $550mm and includes a $375mm fully committed PIPE anchored by investors including Fidelity Management & Research Company and Inclusive Capital. The transaction is expected to close late in Q4 2020 or early Q1 2021.
  • Mountain Crest Acquisition Corp (MCAC) announced a deal to acquire Playboy Enterprises, Inc. The deal reflects an enterprise value of $381.3mm and includes a $50mm PIPE. The transaction is expected to close early in Q1 2021.
  • LifeSci Acquisition Corp. (LSAC) announced a deal to acquire Vincera Pharma, a biopharmaceutical company aspiring to address the unmet medical needs of patients with cancer through paradigm-shifting therapeutics. The deal's $40mm minimum cash condition is satisfied by support agreements entered into with existing public shareholders including RTW Investments, EcoR1 Capital, Perceptive Advisors, and Boxer Capital. The transaction is expected to close in Q4 2020.
  • Graf Industrial Corp. (GRAF) closed its acquisition of Velodyne Lidar on Tuesday 9/29/2020, concurrent with the effectiveness of the registration statement covering the deal's PIPE shares. Ordinary shares and warrants commenced trading on the NASDAQ on Wednesday 9/30/2020 as “VLDR” and “VLDRW.”
  • Tortoise Acquisition Corp. (SHLL) closed its acquisition of Hyliion on Thursday 10/1/2020. A total of 3,308 (0.01%) shares were redeemed and shares and warrants are now trading on the NYSE as "HYLN" and "HYLN WS."
  • Bloomberg reported that Michael Klein's Churchill Capital Corp. II (CCX) is in talks to simultaneously acquire edtech companies Global Knowledge Training LLC and Skillsoft Ltd.
IPOs
  • Apollo Strategic Growth Capital (APSG) raised $750mm for an acquisition in natural resources or energy. Units contain one-third warrant coverage.
  • Avanti Acquisition Corp. (AVAN) raised $600mm in an upsized IPO for a European company with a strong US and international presence. Units contain one-half warrant coverage.
  • Vy Global Growth (VYGG) raised $500mm for an acquisition in technology. Units contain one-fifth warrant coverage.
  • Altimeter Growth Corp. (AGC) raised $450mm for an acquisition in technology. Units contain one-fifth warrant coverage.
  • Sports Entertainment Acquisition Corp. (SEAH) raised $400mm in an upsized IPO for an acquisition in sports and entertainment. Units contain one-half warrant coverage.
  • Vesper Healthcare Acquisition Corp. (VSPR) raised $400mm for an acquisition in pharmaceuticals and healthcare. Units contain one-third warrant coverage.
  • VG Acquisition Corp. (VGAC) raised $480mm in an upsized IPO for an acquisition in travel and leisure, health and wellness or technology. Units contain one-third warrant coverage.
  • Qell Acquisition Corp (QELL) raised $330mm in an upsized IPO for an acquisition in next-generation mobility, transportation and sustainable industrial technology. Units contain one-third warrant coverage.
  • Atlantic Street Acquisition Corp (ASAQ) raised $250mm for an acquisition in TMT, healthcare, or fintech. Units contain one-half warrant coverage.
  • FG New America Acquisition Corp. (FGNA) raised $225mm for an acquisition in insuretech and fintech. Units contain one-half warrant coverage.
  • Climate Change Crisis Real Impact I Acquisition Corporation (CLII) raised $200mm for an acquisition in ESG, decarbonization and combating climate change. Units contain one-half warrant coverage.
  • IG Acquisition Corp. (IGAC) raised $300mm for an acquisition in leisure, gaming and hospitality. Units contain one-half warrant coverage.
  • Ion Acquisition Corp 1 Ltd. (IACA) raised $225mm in an upsized IPO for an acquisition in Israeli technology companies. Units contain one-fifth warrant coverage.
  • Recharge Acquisition Corp. (RCHG) raised $200mm without a specific sector focus. Units contain one-half warrant coverage.


Charter Extensions

  • ANDA set an extension meeting date of 10/28/2020.
  • FMCI extended its charter through 10/30/2020 with no contribution to trust.
  • SAMA extended its charter through 12/31/2020 with no contribution to trust.
  • HCCH extended its charter through 1/2/2021.
Upcoming Meetings and Deadlines
  • 10/7/2020 CCXX MultiPlan approval meeting
  • 10/12/2020 SAQN CuriosityStream approval meeting
  • 10/13/2020 INSU Shift approval meeting (liquidation deadline 11/3/2020)
  • 10/15/2020 FMCI Ittella approval meeting (liquidation deadline 10/30/2020)
  • 10/15/2020 FTAC Paya approval meeting (liquidation deadline 11/20/2020)
  • 10/16/2020 AMCI Charter extension meeting (liquidation deadline 10/20/2020)


Links

  • Business Insider published an article featuring some of the bankers, lawyers, and investors behind recent SPACs.
  • The Defiance NextGen SPAC IPO ETF (NYSE:SPAK) became the first SPAC ETF to open for trading.
  • Buyouts published an article on the effect SPACs are having on the IPO market.
  • Bloomberg reported that Amazon-backed Ecobee is said to be in talks with Canadian SPAC Canaccord Genuity Growth II.
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