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April 12, 2021
Welcome to the SPAC Research weekly newsletter.
The SEC's focus on SPACs continued last week. John Coates, the SEC's acting director of corporate finance, wrote a public statement with a critical eye on long-dated revenue projections for SPAC transactions and the application of safe harbor provisions. Coates also touched on the need for increased disclosure and the similarities between a regular IPO and the "deSPAC" go-public moment for an operating company.
Institutional and Retail SPAC Ownership
It can be hard to measure the relationship between SPACs and retail investors. We've explored the phenomenon before, and numerous other outlets have discussed the intersection of SPACs and retail, typically with cautious verbiage.
It seems trivial to observe that retail enthusiasm for venture capital-style deal flow contributed to the constructive reception SPAC deals received for much of Q1. But our focus here is on the front end.
A lot has happened since Dec. 31, 2020, the "as-of" date for the most recent round of public 13F filings. The SPAC space has basically doubled since then, and lots of portfolio dynamics have changed. But it's instructive to study the state of the world at the end of last year.
First let's look at the largest SPAC books at year-end 2020. Many of the funds below are likely executing a SPAC-arb playbook of buying primary issuance on leverage at $10 and selling into any market strength. But we can see there were a dozen billion-dollar SPAC portfolios at the end of 2020, up from eight when we measured three months earlier.
Again, with nearly $100bn of SPAC issuance in Q1 2021, the numbers above are stale and have since expanded dramatically. But on Dec. 31, 2020, there was approximately $79bn of cash sitting in SPAC trust accounts. We estimate the total market capitalization of all active SPACs (both pre-deal and those with a live deal) on that date to be just under $108bn.
The red bars below represent the total dollar value of reported 13F ownership of SPAC securities. And the blue bars represent our estimates for the combined market cap of all active SPACs at each quarterly endpoint. You can see that as recently as Dec. 31, 2019, 13F filers owned almost 95% of all SPACs by dollar value. But that percentage had fallen to 77% on Dec. 31, 2020.
If 13F filers hold 77% of all SPAC securities, who owns the rest? We can't attribute the entire gap to retail. There are undoubtedly institutional SPAC-holders whose AUM is below the $100mm 13F filing threshold. But it's also clear the SPAC ownership base has been broadening over the past year, especially for live deals. If institutional ownership is slow-moving and steady-handed, you could view the chart above as a clear expression of how dramatically momentum has taken hold of trading conditions in the SPAC market in recent months.
It's only five weeks or so until the next round of 13F data comes out and we'll be watching carefully to see how things have changed during the transformative first quarter of 2021.
News From the Past Week
- CA Healthcare Acquisition Corp. (CAHC) announced a deal to acquire LumiraDx Limited, a point of care diagnostics testing company. The deal reflects an enterprise value of $5bn and is expected to close in late Q2 or early Q3 2021.
- TWC Tech Holdings II Corp. (TWCT) announced a deal to acquire Cellebrite DI Ltd., a digital intelligence company. The deal reflects an enterprise value of $1.8bn and includes a $300mm PIPE led by Light Street Capital, Makena Capital, and Axon Enterprise, Inc. The transaction is expected to close in Q3 2021.
- Mudrick Capital Acquisition Corporation II (MUDS) announced a deal to acquire The Topps Company, Inc., a global sports and entertainment collectibles and confections company. The deal reflects an enterprise value of $1.3bn and includes a $250mm PIPE at $10.15 per share led by Mudrick Capital, GAMCO Investors and Wells Capital Management. The transaction is expected to close in late Q2 or early Q3 2021.
- Rice Acquisition Corp. (RICE) announced a deal to combine Aria Energy and Archaea Energy, creating a renewable natural gas platform. The deal reflects an enterprise value of $1.2bn and includes a $300mm PIPE led by The Baupost Group, BNP Paribas Energy Transition Fund, and CIBC. The transaction is expected to close in Q3 2021.
- Rotor Acquisition Corp. (ROT) announced a deal to acquire Sarcos Robotics, a developer of robots that augment humans to enhance productivity and safety. The deal reflects an enterprise value of $1.3bn and includes a $220mm PIPE led by BlackRock, Millennium Management LLC and Palantir Technologies Inc. The transaction is expected to close in Q3 2021.
- Mountain Crest Acquisition Corp. II (MCAD) announced a deal to acquire Better Therapeutics, a prescription digital therapeutics company delivering cognitive behavioral therapy to address the root causes of cardiometabolic diseases. The deal reflects an enterprise value of $187mm and includes a $50mm PIPE led by Farallon Capital Management, RS Investments and Sectoral Asset Management. The transaction is expected to close in the summer of 2021.
- Collective Growth Corporation (CGRO) closed its acquisition of Innoviz Technologies on Monday 4/5/2021 with 5.9% of public shares exercising redemption rights. Ordinary shares and warrants are now trading on the NASDAQ as “INVZ” and “INVZW.”
- New Providence Acquisition Corp. (NPA) closed its acquisition of AST SpaceMobile on Tuesday 4/6/2021 with less than 1% of public shares exercising redemption rights. Ordinary shares and warrants are now trading on the NASDAQ as "ASTS" and "ASTSW."
- The Financial Times reported that Altimeter Growth Corp. (AGC) is in talks with Grab, a Singapore-based technology company in the ride-hailing, food delivery and payments space.
- Reuters reported that Impossible Foods is exploring a public listing with a SPAC deal.
- Bloomberg reported that Soaring Eagle Acquisition Corp. (SRNG) is in talks with synthetic biology company Ginkgo Bioworks.
- Bloomberg reported that Gores Metropoulos II, Inc. (GMII) is in talks with lodging startup Sonder.
- Bloomberg reported that Yucaipa Acquisition Corporation (YAC) is in talks with German online retailer Signa Sports United GmbH.
- Bloomberg reported that Bridgetown Holdings Limited (BTWN) is in talks with Indonesian online travel company Traveloka.
- Bloomberg reported that Marquee Raine Acquisition Corp. (MRAC) is in talks with Enjoy Technology Inc., a personal commerce platform.
- NEO-listed Mercer Park Brand Acquisition Corp. and California-based cannabis company Glass House Group announced a business combination to create the largest cannabis brand-building platform in California.
- Tetragon Acquisition Corporation I (TACQ) $500mm
- Lamar Partnering Corporation (LPC) $300mm
- Aurvandil Acquisition Corp. (AURV) $250mm
- Black Dragon Acquisition Corp I (DGON) $250mm
- EG Acquisition Corp. (EGGF) $250mm
- ION Acquisition Corp 3 Ltd. (IACC) $250mm
- International Media Acquisition Corp. (IMAQ) $250mm
- Riverview Acquisition Corp. (RVAC) $250mm
- Perception Capital Corp. II (PCCT) $200mm
- Innovatus Life Sciences Acquisition Corp. (ILAC) $175mm
- Clover Leaf Capital Corp. (CLOE) $125mm
- OceanTech Acquisitions I Corp. (OTEC) $100mm
- CM Life Sciences III Inc. (CMLT) raised $480mm in an upsized IPO for an acquisition in life sciences. Units contain one-fifth warrant coverage.
- Tio Tech A (TIOA) raised $300mm for an acquisition of a technology-enabled business in Europe. Units contain one-third warrant coverage.
- TPG Pace Solutions Corp. (TPGS) raised $250mm without a specific sector focus. TPGS trades as common stock with no warrant coverage.
- Global SPAC Partners Co. (GLSP) raised $160mm for an acquisition in the Middle East, North Africa, or South & Southeast Asia. Units consist of one subunit and one-half redeemable warrant. Subunits consist of one Class A ordinary share and one-half redeemable warrant.
- Panacea Acquisition Corp. II (PANA) raised $150mm for an acquisition in biotechnology in North America or Europe. PANA trades as common stock with no warrant coverage.
- Aldel Financial Inc. (ADF) raised $100mm for an acquisition of a company exiting the restructuring process, or a business that has transient ownership. Units contain one-half warrant coverage.
- Model Performance Acquisition Corp. (MPAC) raised $50mm for an acquisition in Asia. Units contain one-half warrant coverage and one right.
- Ace Global Business Acquisition Limited (ACBA) raised $46mm for an acquisition in gaming and e-commerce in greater China, Japan, and Southeast Asia. Units contain whole warrant coverage.
Upcoming Meetings and Deadlines
- 4/14/2021 THCA Charter extension meeting (liquidation deadline 4/16/2021)
- 4/15/2021 SCPE Charter extension meeting (liquidation deadline 4/16/2021)
- 4/16/2021 DMYD Genius Sports approval meeting
- 4/16/2021 LATN Charter extension meeting (liquidation deadline 4/22/2021)
- 4/21/2021 GIK Lightning eMotors approval meeting
- 4/21/2021 BRPA Charter extension meeting (liquidation deadline 4/23/2021)
- 4/23/2021 ALAC Charter extension meeting (liquidation deadline 4/26/2021)
Disclosures: Site administrators may maintain positions in various SPAC securities and may trade in or out of those securities at any time without notice. Information from spacresearch.com is provided for informational purposes only and should not be relied upon as the basis for any investment decision. Nothing on spacresearch.com is a recommendation or solicitation to buy or sell any investment.