ICR’s SPAC Market Update & Outlook indicates that the shake-out from over-issuance in early 2021 appears to be winding down, and corporate divestitures are providing a consistent source of sizeable, high-quality SPAC targets.
The SPAC IPO market seems to have normalized, with six SPAC IPOs pricing during the first quarter, of which over 30% were from serial sponsors that returned to the market. These serial sponsors elected to raise larger trusts, increasing average SPAC IPO size for Q1 to $114 million, up 2% from Q4 2023 and 39% from the same quarter last year. In the first quarter there were 29 completed SPAC deals, a similar amount to the previous quarter and above the quarterly average for the last two years. Notably, 15 liquidations occurred, a decrease of 63% from the previous quarter and down from the average of 49 per quarter in 2023.
“We believe the market has now self-corrected as SPAC IPOs have normalized, SPAC liquidations have taken excess capital out of the market and more sponsor teams are working creatively to try to get deals done,” said Don Duffy, President of ICR. “Fairness opinions have also become more prominent, included in over 60% of the deals that closed so far in 2024, providing increased diligence for public investors.”
During the first quarter of 2024, three SPAC transactions were announced for targets with enterprise values over $1 billion. The largest of the transactions was for a digital investment platform, Webull, which announced a $7.3 billion merger. Overall, SPAC transactions tend to fall into two categories – larger companies that partner with experienced sponsors to access substantial capital, or smaller companies that value the path to a public listing more than significant new capital. Read more.
