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BAKKT Drops on PIPE Unlock, 2 Deals, and a lot of Red

The SPAC market is weakening alongside the broader market as IPOs are struggling to hold NAV, deSPACs are dropping, warrants are dropping and the press is back with a negative narrative.

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The majority of the SPAC market dropped today along with the market. The average pre-deal SPAC is now trading back down to $9.82. SPAC warrants were hit hard as well and the average price for both pre-deal and announced deal SPACs falling again.

Source: Boardroom Alpha Warrant Monitor

Source: Boardroom Alpha Warrant Monitor

There are now over 40 SPAC IPOs in December and only 14 deSPACs leaving SPAC market participants to wonder when and how the market can come back into some balance. The increasingly likely outcome is that "Peak Deal" will hit in 2022 and the market will suffer through a meaningful amount of bad deals and liquidations as SPACs near their deadlines. 

As we've seen over the past month, SEC Chair Gary Gensler is laser focused on SPACs. So if 2022 sees an increase in incidents that appear to show SPACs as "bad investment vehicles" (true or not), it will fuel the SEC's desire to regulate away the risks. We've always argued that some additional regulation is desirable, but if the pendulum swings too far, it could have a materially negative impact on SPACs going forward.

Yield investors will note that SPACs are in fact outperforming. Given the $10 redemption floor, the majority of SPACs trading under $10, and increasing numbers with overfunded trusts, it gives a yield investor a lot of opportunity. They can select what they believe to be the most attractive under-NAV SPACs and get a guaranteed yield plus the asymmetric upside of a great deal being announced. And, for those really playing that strategy, they will know to get out before ex-redemption / deSPAC so they can mitigate the post-deSPAC (otherwise known as being a proper public company) risk. 

Deal Announcements

The morning saw a deal announced with Founder SPAC (FOUN) taking Rubicon Technologies public. Rubicon is a waste and recycling platform with high profile investors such as Leonardo DiCaprio, Marc Benioff, KKR, and Paul Tudor Jones. The deal is valued at $2B and has a $111M PIPE with Palantir (PLTR) and the New Zealand Super Fund involved. FOUN closed the day at $9.93 so it will have to continue to climb higher or it will expect to continue the trend of meaningfully high redemptions. 

After market, a second deal was announced as North Atlantic Acquisition Corporation (NAAC) is set to take TeleSign Holdings, Inc. public. The deal is valued at $1.3B and is supported by a $107.5M PIPE. 

According to the press release TeleSign is "a pioneer and leader in connecting, protecting and defending the world's leading brands and their customers as they engage in the digital economy."

Telesign is expecting $391M in revenue for 2021 and forecasting that to grow to $1.1B in 2026.

telesign_kpis_investor_deck

De-SPAC Ticker Changes

  • Broadstone Acquisition Corp. (BSN) officially became Vertical Aerospace and started trading as EVTL on the NYSE. 
  • Isos Acquisition Corp. (ISOS) officially became Bowlero and started trading as BOWL on the NYSE

SPAC Rumor

There is a new rumor from the ever reliable Gillian Tan at Bloomberg that has Byju, and Indian edtech, in a possible merger with one of M. Klein's Churchill SPACs. There are currently three pre-deal Churchill SPACs: CCVI, CCVII, CCV.

SPAC Vote Calendar

CMLT went to vote today, but we're awaiting results. It will have passed, so the redemption numbers will the key learning.

Dec 20 | $ 9.29 | CFV - CF Acquisition Corp. V --> Satellogic
Dec 21 | $ 9.89 | MACQ - MCAP Acquisition Corporation --> AdTheorent Inc.
Dec 21 | $ 9.75 | HCAQ - HealthCor Catalio Acquisition Corp. --> Hyperfine, Inc.
Dec 23 | $ 10.15 | DBDR - Roman DBDR Tech Acquisition Corp. --> CompoSecure Holdings, L.L.C.
Dec 23 | $ 10.64 | FSII - FS Development Corp. II --> Pardes Biosciences, Inc
Dec 28 | $ 9.97 | ATHN - Athena Technology Acquisition Corp. --> Heliogen
Dec 28 | $ 9.96 | NGCA - NextGen Acquisition Corp. II --> Virgin Orbit
Jan 04 | $ 9.96 | VPCC - VPC Impact Acquisition Holdings III, Inc. --> DAVE INC.

Today's SPAC Movers

While technically not a SPAC anymore, recent deSPAC BAKKT dropped 34% to $9.08 as its PIPE officially unlocked.

Biggest SPAC Gainers
1.34% ~ $ 9.80 | IIAC - Investindustrial Acquisition Corp. (Announced)
1.03% ~ $ 9.80 | IPVI - InterPrivate IV InfraTech Partners Inc. (Pre-Deal)
.82% ~ $ 9.80 | GGMC - Glenfarne Merger Corp. (Pre-Deal)
.82% ~ $ 9.80 | BGSX - Build Acquisition Corp. (Pre-Deal)
.81% ~ $ 9.93 | FOUN - Founder SPAC (Announced)
.59% ~ $ 9.83 | LVRA - Levere Holdings Corp (Pre-Deal)
.52% ~ $ 9.72 | ARYE - ARYA Sciences Acquisition Corp V (Pre-Deal)
.51% ~ $ 9.89 | YTPG - TPG Pace Beneficial II Corp. (Pre-Deal)
.49% ~ $ 10.29 | HUGS - USHG Acquisition Corp. (Announced)
.41% ~ $ 9.73 | WAVC - Waverley Capital Acquisition Corp. 1 (Pre-Deal)
.41% ~ $ 9.73 | TBSA - TB SA Acquisition Corp (Pre-Deal)
.41% ~ $ 9.78 | DNZ - D and Z Media Acquisition Corp. (Pre-Deal)
.41% ~ $ 9.90 | PCX - Parsec Capital Acquisitions Corp. (Pre-Deal)
.41% ~ $ 9.91 | GACQ - Global Consumer Acquisition Corp. (Announced)
.40% ~ $ 9.92 | ARTE - Artemis Strategic Investment Corporation (Pre-Deal)
.40% ~ $ 9.95 | GCAC - Growth Capital Acquisition Corp. (Announced)
.40% ~ $ 10.04 | AMAO - American Acquisition Opportunity Inc (Pre-Deal)
.40% ~ $ 10.14 | ATA - AMERICAS TECHNOLOGY ACQUISITION CORP. (Pre-Deal)
.39% ~ $ 10.17 | GIIX - GORES HOLDINGS VIII, INC. (Announced)
.31% ~ $ 9.73 | GOBI - Gobi Acquisition Corp. (Pre-Deal)

Biggest SPAC Losers
-20.29% ~ $ 8.17 | YAC - Yucaipa Acquisition Corporation (Announced)
-19.82% ~ $ 12.22 | ESSC - East Stone Acquisition Corporation (Announced)
-8.35% ~ $ 10.64 | FSII - FS Development Corp. II (Announced)
-5.12% ~ $ 11.86 | CFVI - CF Acquisition Corp. VI (Announced)
-4.02% ~ $ 51.33 | DWAC - Digital World Acquisition Corp. (Announced)
-3.97% ~ $ 11.13 | GGPI - Gores Guggenheim, Inc (Announced)
-3.76% ~ $ 9.21 | CMLT - CM Life Sciences III Inc. (Announced)
-3.65% ~ $ 10.55 | XPDI - Power & Digital Infrastructure Acquisition Corp. (Announced)
-3.58% ~ $ 9.29 | CFV - CF Acquisition Corp. V (Announced)
-3.07% ~ $ 10.43 | CND - Concord Acquisition Corp (Announced)
-2.51% ~ $ 9.70 | ATMR - Altimar Acquisition Corp. II (Announced)
-2.30% ~ $ 9.75 | HCAQ - HealthCor Catalio Acquisition Corp. (Announced)
-2.18% ~ $ 9.87 | DYNS - Dynamics Special Purpose Corp. (Pre-Deal)
-1.52% ~ $ 10.37 | SNII - Supernova Partners Acquisition Company II, Ltd. (Announced)
-1.01% ~ $ 9.79 | BLSA - BCLS Acquisition Corp. (Pre-Deal)
-.92% ~ $ 11.80 | MEKA - MELI Kaszek Pioneer Corp (Pre-Deal)
-.92% ~ $ 9.68 | EGGF - EG Acquisition Corp. (Pre-Deal)
-.91% ~ $ 9.81 | ABGI - ABG Acquisition Corp. I (Pre-Deal)
-.86% ~ $ 10.32 | IPOF - Social Capital Hedosophia Holdings Corp VI (Pre-Deal)
-.82% ~ $ 9.73 | FLAC - Frazier Lifesciences Acquisition Corporation (Pre-Deal)

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)