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May 27, 2025

Why Are SPACs Surging?

We've been asked this question frequently in 2025: Why is the market enthusiastic for SPACs right now?

The broader market is volatile at the moment and the IPO climate has been challenging for most of the year. But retail remains enthusiastic for stocks, and a number of investment themes continue to garner speculative interest.

You can see on the chart below that SPAC front ends are racing forward at the fastest pace in three years.
Some deals are getting a welcome reception from the market. We're even seeing a handful of deals that feature common stock PIPE financing rather than the heavily structured financing that teams needed back in 2023-2024.

There are some pretty straightforward reasons why sponsors are coming back to the market right now:
  • Yields are down.
  • Pre-deal warrant prices are up.
  • IPO terms are friendlier to sponsors than they've been in years.
SPAC yields (in green, above) have edged lower this year, which means investors are paying a higher price for the same common shares. When yields were 6% last fall, investors might pay $9.75 for a generic SPAC with $10 in trust and two years remaining. Now at 5% yields, those same shares could be worth closer to $9.90.
Warrant prices are up. The SPAC Research Warrant Index measures the value of pre-deal SPAC warrants which have more than tripled in the past year off of all-time lows.
And the market is giving sponsors more time to complete their deal, while requiring less trust overfunding. Back in 2022, the average SPAC sponsor was overfunding their trust at 102% and getting just over a year to close a deSPAC. Now, trust overfunding is down to almost zero, and sponsors are mostly getting 21 months or greater for their vehicle.

A generic SPAC IPO unit now delivers greater value from both common shares and warrants to investors, so sponsors are no longer required to overfund their trust account to satisfy investors.

Demand for SPAC front ends never went away, even through the toughest times for SPACs. But IPO conditions have gotten much easier for sponsors and supply has finally come rushing back.
News From the Past Week

Deal News

Deal Closings & Approvals

  • Bannix Acquisition Corp. (BNIX) shareholders approved the company’s acquisition of VisionWave Technologies at a meeting Thursday 5/22/2025 with less than 1% of public shares remaining. No closing timeline was given.

IPOs
Name Ticker Raised ($mm) Sector Cash in Trust Coverage
Oyster Enterprises II OYSE 220 General 100.0% R
ProCap Acq PCAP 220 General 100.0% 1/3
Armada II AACI 200 Technology 100.5% 1/2
Cal Redwood CRA 200 Media & Entertainment 100.0% R
Pelican Acq PELI 75 Technology 100.0% R

New S-1's
Name Ticker Size ($mm) Underwriter Trust Funding Coverage
Cohen Circle II CCII 220 Clear Street 100.0% R
A Paradise APAD 200 Cohen 100.0% R
LightWave Acq LWAC 150 BTIG 100.3% 1/2
FIGX Capital FIGX 131 Cantor 100.0% 1/2
InFinT 2 * 100 Roth Capital 100.5% R

Liquidations
None.

Charter Extensions

  • IRRX extended its charter through 7/15/2025 with a monthly $5,000 ($0.12 per share) sponsor contribution to trust. Less than 1% of public shares remain, representing $570k in trust.

Upcoming Meetings and Deadlines

  • 5/30/2025 BSII World Media and Entertainment Universal Inc. approval meeting (merger outside date 7/10/2025)
  • 5/30/2025 DIST Youlife International Holdings Inc. approval meeting
  • 5/30/2025 WINV Xtribe approval meeting
  • 5/30/2025 GMFI Charter extension meeting
Disclosures: Information is provided for informational purposes only and should not be relied upon as the basis for any investment decision nor considered as a recommendation or solicitation to buy or sell any securities. Site administrators may hold and trade in SPAC securities without notice.


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