Return Of The SPAC: They’re Back And Bigger Than Ever

SPAC IPOs 2020

The Briefing:

  • Special Purpose Acquisition Companies (SPACs) are shell companies created with the sole intent to raise capital and buy a private organization or a stake in a company.
  • In 2020, 248 new SPACs went public, an increase of more than 300% from 2019.
  • 2020 was a record-breaking year for SPACs on many fronts. For instance, Bill Ackman’s Pershing Square Tontine Holdings (PSTH) raised $4 billion—the largest raised in SPAC history.

SPACs are Back and Bigger than Ever

In 2020, SPACs raised over $82 billion in capital. That’s more funds in one year than in the last 10 years combined. But what exactly is a SPAC, and how have they changed over the years?

SPAC IPOs versus Traditional IPOs

SPAC IPOs are essentially the opposite of traditional IPOs. In a traditional IPO, an established company goes public to raise funds. In contrast, SPAC IPOs involve a shell company that’s already raised capital and is looking to purchase an organization (or a stake in a company). While traditional IPOs are seeking funds, SPAC IPOs already have the funds — what they’re seeking is an organization to attach themselves to.

SPACs, also known as “Blank Check” companies, provide a faster way to raise funds compared to traditional IPOs. That’s because the audit process for a SPAC is shorter, since they don’t have any financial statements to review.

A Brief History of SPACs

248 SPACs went public in 2020 — 189 more than in 2019.

2020 has by far been the biggest year for SPACs in the last few decades. Here’s a look at the number of SPAC IPOs over the last 15 years, along with their average size:

Year # of SPAC IPOs Average IPO Size (M)
2005 28 $75.5
2006 37 $91.5
2007 66 $183.2
2008 17 $226.0
2009 1 $36.0
2010 7 $71.8
2011 16 $69.4
2012 9 $54.5
2013 10 $144.7
2014 12 $145.8
2015 20 $195.1
2016 13 $269.2
2017 34 $295.5
2018 46 $233.7
2019 59 $230.5
2020 248 $334.4
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Disclosure: Source: SPAC Data

Details: All US-listed SPACs are included in the data set. Figures as of Dec 30, ...

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