By this time last year, Citigroup had shepherded nearly 60 of the corporate shells known as special purpose acquisition companies, or SPACs, onto U.S. stock exchanges, earning huge commissions as the biggest principal underwriter of those deals during that time.
So far this year, with regulators poised to crack down on the method of taking companies to market without an initial public offering and more such transactions failing to come to full fruition, it has underwritten just three, Barron’s reports.
Citigroup and other big banks—including Goldman Sachs Group, Deutsche Bank and Credit Suisse—are fleeing the once crowded SPAC space, leaving a greater share of the deals to smaller underwriters, according to a Barron’s analysis. Big banks are abandoning the once wildly popular IPO alternative because it’s increasingly seen as less lucrative and more risky, said Usha Rodrigues, a University of Georgia law professor who studies SPACs. Read more.
