Colonnade Advisors said its proprietary SPAC Attack Index, which tracks the amount of capital in the system looking for deals, shows record-level pressure.
The SPAC Attack Index provides a metric for the amount of capital under “pressure” to be deployed within a specific timeframe. An important consideration of SPAC-related capital is that if a SPAC does not find a merger partner before the end of its lifespan, the SPAC is forced to unwind and return the capital to investors, with the sponsors losing their upfront investment.
When Colonnade Advisors first created the index in Q3/2020, the index measured 237. It rose steadily and broke 1000 in Q3 of 2021. The index increased nearly five-fold in 2021 and was last measured at 1449 in the fourth quarter of 2021. This rise in the index is due to the fact that the “release valve” at the bottom of the capital layers takes time. De-SPACs are complex and time-consuming as investors become more and more selective.
And capital coming in at the top is not slowing down. In Q4/2021, more than 160 new SPAC IPOs injected an additional $33 billion of capital into the system. Read more.
