Gensler Puts the SPAC Market on Notice + Big Redemptions Coming
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SEC Chair Gary Gensler this week came out and was very loud this about his belief about three things. First, that SPACs do not offer the necessary protections for investor. Second, the field needs to be leveled between SPACs and IPOs. And, third, the SEC will act.
The rumblings began earlier this year, but to date the biggest action has been the requirement to change how warrants are valued on their books. This slowed the market in Q2, but over the course of Q3 and Q4 it has begun to ramp up again with 15 IPOs in just the last two days alone. The accounting changes were, effectively, nothing more than a nuisance, but from our perspective, the fact that they slowed the market was a bit of a silver lining.
Source: Boardroom Alpha's SPAC Intelligence service
The majority of the market will most likely agree with Gensler that there are too many SPACs in the market at the moment and incentives aren't always aligned. This is especially true given so many will come up to their deadlines at the same time as the 2021Q1 vintage ages past 12 months as 2022Q1 progresses. We've cautioned for a while that "Peak Deal" -- when all of these SPACs will be forced to get a deal done -- will likely result in a number of bad deals that will inevitably be bad for the market. This remains one of the biggest risks for SPACs in 2022.
Gensler has also cited the supposed advantage that PIPE investors have over the general public when investing in SPACs. By our accounting, PIPE investors, alongside outside investors, are often hurt significantly when deSPACs go badly. If Gensler and the SEC want to really dig into the advantaged parties then they should look at the Sponsor dynamics as they are almost always the winner in a SPAC deal regardless of how other stakeholders do. It's here where there could be a place for improved alignment to and protections for traditional investors.
SPAC Deal Announcements
There were two early morning deal announcements on Friday.
Elsewhere in SPACs
Outside of a couple isolated big movers the SPAC market was generally quiet on a smoother and more positive day in the market. Ex-redemption put downward pressure on SPACs that are going to vote on Monday and Tuesday of next week (as is typical). Watch for redemptions and low float opportunities next week given all are going into their votes beneath $10 even prior to ex-redemption.
The FST / Fertitta Entertainment deal was officially terminated. It was a rough ending to the deal that will leave some wary of the players going forward.
SPAC IPOs
As noted above the SPAC IPOs gushed in on Thursday and Friday. There are too many and if this pace continues it won't end well for any SPAC market participant. And, if it tilts things too much, the SEC will likely have to play a stronger hand which would likely also be bad for the overall market. Here's a look at where they ended the week (remember most have overfunded trusts so ideally they'd be well over $10).
$ 9.91| TCOA - Trajectory Alpha Acquisition Corp.
$ 10.00 | PORT - Southport Acquisition Corporation
$ 10.06 | XPDB - Power Digital Infrastructure Acquisition II Corp.
$ 10.18 | FXCO - Financial Strategies Acquisition Corp.
$ 9.98 | ATEK - Athena Technology Acquisition Corp. II
$ 10.01 | HAIA - Healthcare AI Acquisition Corp.
$ 10.00 | GFGD - Growth for Good Acquisition Corp
$ 9.99 | FRBN - Forbion European Acquisition Corp.
$ 9.96 | TGAA - Target Global Acquisition I Corp.
$ 10.05 | GGAA - Genesis Growth Tech Acquisition Corp.
$ 10.03 | WEL - Integrated Wellness Acquisition Corp
$ 10.05 | HORI - Emerging Markets Horizon Corp.
$ 10.00 | RJAC - Jackson Acquisition Co
$ 10.03 | IGTA - Inception Growth Acquisition Ltd
$ 10.07 | DAOO - Crypto 1 Acquisition Corp
SPAC Calendar
We're closing in on the last deal votes of 2022 and, hopefully, an increased pace of deals and deSPACs in Q1/Q2. Next week will see a number of votes with all of the SPACs trading under $10. Watch for a week of big redemptions.
Dec 13 | $ 9.43 | YAC - Yucaipa Acquisition Corporation --> SIGNA Sports United
Dec 14 | $ 9.57 | BSN - Broadstone Acquisition Corp. --> Vertical Aerospace
Dec 14 | $ 9.80 | ISOS - Isos Acquisition Corp. --> Bowlero
Dec 16 | $ 9.97 | CMLT - CM Life Sciences III Inc. --> EQRx, Inc.
Dec 20 | $ 9.88 | CFV - CF Acquisition Corp. V --> Satellogic
Dec 21 | $ 9.97 | MACQ - MCAP Acquisition Corporation --> AdTheorent Inc.
Dec 21 | $ 9.97 | HCAQ - HealthCor Catalio Acquisition Corp. --> Hyperfine, Inc.
Dec 22 | $ 10.17 | SEAH - Sports Entertainment Acquisition Corp --> Super Group
Dec 23 | $ 10.82 | FSII - FS Development Corp. II --> Pardes Biosciences, Inc
Dec 23 | $ 10.15 | DBDR - Roman DBDR Tech Acquisition Corp. --> CompoSecure Holdings, L.L.C.
Dec 28 | $ 9.96 | ATHN - Athena Technology Acquisition Corp. --> Heliogen
Dec 28 | $ 9.99 | NGCA - NextGen Acquisition Corp. II --> Virgin Orbit
Today's SPAC Movers
Biggest Gainers8.53% ~ $ 14.00 | ESSC - East Stone Acquisition Corporation (Announced)
1.95% ~ $ 9.95 | SHQA - Shelter Acquisition Corporation I (Pre-Deal)
1.54% ~ $ 9.90 | FHLT - Future Health ESG Corp. (Pre-Deal)
1.13% ~ $ 10.73 | SNII - Supernova Partners Acquisition Company II, Ltd. (Announced)
.99% ~ $ 10.16 | FST - FAST ACQ CP (Pre-Deal)
.93% ~ $ 9.77 | ALPA - ALPHA HEALTHCARE ACQUISITION CORP III (Pre-Deal)
.71% ~ $ 9.95 | CRHC - Cohn Robbins Holdings Corp. (Pre-Deal)
.62% ~ $ 9.71 | ORIA - Orion Biotech Opportunities Corp. (Pre-Deal)
.62% ~ $ 9.80 | AGAC - African Gold Acquisition Corporation (Pre-Deal)
.62% ~ $ 9.81 | LHAA - Lerer Hippeau Acquisition Corp (Pre-Deal)
.51% ~ $ 9.82 | PANA - Panacea Acquisition Corp. II (Pre-Deal)
.50% ~ $ 9.99 | ENVI - Environmental Impact Acquisition Corp. (Announced)
.41% ~ $ 9.80 | STRE - Supernova Partners Acquisition Company III, Ltd (Pre-Deal)
.40% ~ $ 10.00 | GPCO - Golden Path Acquisition Corporation (Announced)
.31% ~ $ 9.71 | GXII - GX Acquisition Corp. II (Pre-Deal)
.31% ~ $ 9.75 | KSI - Kadem Sustainable Impact Corporation (Pre-Deal)
.31% ~ $ 9.78 | RMGC - RMG Acquisition Corp. III (Pre-Deal)
.31% ~ $ 9.83 | ADRA - Adara Acquisition Corp. (Pre-Deal)
.31% ~ $ 9.84 | LDHA - LDH Growth Corp I (Pre-Deal)
.30% ~ $ 9.87 | GAPA - G&P Acquisition Corp. (Pre-Deal)
Biggest Losers
-10.50% ~ $ 10.82 | FSII - FS Development Corp. II (Announced)
-4.65% ~ $ 9.43 | YAC - Yucaipa Acquisition Corporation (Announced)
-4.04% ~ $ 9.75 | CPAA - Conyers Park III Acquisition Corp. (Pre-Deal)
-3.45% ~ $ 12.03 | MEKA - MELI Kaszek Pioneer Corp (Pre-Deal)
-2.29% ~ $ 9.80 | PEPL - PepperLime Health Acquisition Corp (Pre-Deal)
-2.07% ~ $ 9.93 | DTRT - DTRT Health Acquisition Corp. (Pre-Deal)
-1.99% ~ $ 11.30 | XPDI - Power & Digital Infrastructure Acquisition Corp. (Announced)
-1.85% ~ $ 9.57 | BSN - Broadstone Acquisition Corp. (Announced)
-1.72% ~ $ 9.72 | IPVI - InterPrivate IV InfraTech Partners Inc. (Pre-Deal)
-1.32% ~ $ 9.73 | PFTA - Portage Fintech Acquisition Corp. (Pre-Deal)
-1.26% ~ $ 10.22 | BRPM - B. Riley Principal 150 Merger Corp. (Announced)
-1.22% ~ $ 9.70 | GOBI - Gobi Acquisition Corp. (Pre-Deal)
-1.22% ~ $ 9.75 | FTEV - FinTech Evolution Acquisition Group (Pre-Deal)
-1.21% ~ $ 9.78 | SWSS - Springwater Special Situations Corp. (Pre-Deal)
-1.14% ~ $ 10.41 | IPOF - Social Capital Hedosophia Holdings Corp VI (Pre-Deal)
-1.12% ~ $ 10.57 | CND - Concord Acquisition Corp (Announced)
-1.09% ~ $ 9.98 | VCXA - 10X Capital Venture Acquisition Corp. II (Pre-Deal)
-1.01% ~ $ 9.85 | CIIG - CIIG Capital Partners II, Inc. (Pre-Deal)
-1.00% ~ $ 9.89 | IIAC - Investindustrial Acquisition Corp. (Announced)
-.94% ~ $ 56.02 | DWAC - Digital World Acquisition Corp. (Announced)
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)
