Blank-check sponsors that jumped on the bandwagon to cash in on the SPAC boom may be stuck with a roughly $4 billion bill as they close up shop and return money to investors, Bloomberg Law reports. That’s on top of the estimated $352 million they’ve already lost this year.
The SPAC craze was a goldmine for sponsors like “SPAC King” Chamath Palihapitiya and Howard Lutnick. They were early to the game and benefited from a bull market that bolstered the industry with investors eager to pay large premiums for a pile of cash. Now sponsors who “piled in during the boom in 2021” could lose billions, according to Jay Ritter, professor of finance at the University of Florida. Read more.
