Large Redemptions Might Force a Recalibration of Sponsor Economics
We have recently been witnessing a slew of SPACs with huge redemptions at their merger votes, the latest being Sandbridge's shareholders redeeming 86% of its trust. While some SPAC sponsors have put it place terms to either purchase redeemed shares (see Foley Trasimene) or an agreement to forfeit a portion of their promote if a certain number of shares redeem (see Far Peak Acquisition Corp) - the vast majority of SPAC sponsors are not required to lower their economics in the event of high redemptions.
The result turns out to be somewhat of a raw deal for SPAC shareholders and PIPE investors. Sponsors are getting a bigger piece of a smaller pie, with no additional capital required for such a deal. Given the already difficult conditions in the PIPE market (over-saturation, poorly performing deals), don't be surprised to see more merger and PIPE agreements to include provisions that alter sponsor economics in the event of large redemptions.
Reinvent Technology Partners Y (RTPY), the third SPAC from Reid Hoffman & Marc Pincus, is said to have agreed to a deal with self-driving startup Aurora Innovation.
The team's two other SPACs that have priced are waiting to close their deals, and hovering around NAV. RTPY is trading slightly up pre-market on the news.
Jul 15 | $ 10.23 | DCRB - Decarbonization Plus Acquisition Corp --> Hyzon Motors Inc.
Jul 15 | $ 10.01 | NHIC - NewHold Investment Corporation --> Evolv Technology
Yesterday's Price Action
No surprise here as Stable Road Acquisition (SRAC) dropped another 10.27% on the back of the SEC's fine. Will this deal reach the finish line?
-10.27% ~ $ 10.66 | SRAC - Stable Road Acquisition Corp. (Announced)
-8.37% ~ $ 8.32 | SBG - Sandbridge Acquisition Corporation (Announced)
-8.18% ~ $ 23.79 | CCIV - Churchill Capital Corp IV (Announced)
-5.95% ~ $ 9.17 | GXGX - GX Acquisition Corp (Announced)
-5.85% ~ $ 11.58 | CMLF - CM Life Sciences Inc (Announced)
-5.31% ~ $ 11.77 | THCB - Tuscan Holdings Corp. (Announced)
-4.71% ~ $ 11.34 | FWAA - Fifth Wall Acquisition Corp. I (Announced)
-4.58% ~ $ 13.95 | GHVI - Gores Holdings VI Inc (Announced)
-4.58% ~ $ 11.25 | CMII - CM Life Sciences II Inc. (Announced)
-4.57% ~ $ 8.56 | AONE - one (Announced)
-4.49% ~ $ 10.86 | PDAC - Peridot Acquisition Corp (Announced)
-4.39% ~ $ 13.27 | PSAC - Property Solutions Acquisition Corp (Announced)
-4.03% ~ $ 11.20 | TDAC - Trident Acquisitions Corp (Announced)
-3.39% ~ $ 20.36 | RSVA - Rodgers Silicon Valley Acquisition Corp (Announced)
-3.19% ~ $ 10.62 | VACQ - Vector Acquisition Corp (Announced)
-2.91% ~ $ 10.68 | FTCV - FinTech Acquisition Corp. V (Announced)
-2.83% ~ $ 10.30 | ARYD - ARYA Sciences Acquisition Corp IV (Pre-Deal)
-2.62% ~ $ 13.02 | TPGY - TPG Pace Beneficial Finance Corp (Announced)
-2.54% ~ $ 10.75 | BOWX - BowX Acquisition Corp (Announced)
-2.52% ~ $ 11.21 | MUDS - Mudrick Capital Acquisition Corporation II (Announced)
2.98% ~ $ 10.38 | EMPW - Empower Ltd (Announced)
2.47% ~ $ 10.37 | FGNA - FG New America Acquisition Corp (Announced)
2.01% ~ $ 12.17 | LCY - Landcadia Holdings III Inc (Announced)
1.96% ~ $ 11.42 | AGC - ALTIMETER GROWTH CORP (Announced)
1.93% ~ $ 10.02 | WALD - Waldencast Acquisition Corp. (Pre-Deal)
1.83% ~ $ 10.01 | NHIC - NewHold Investment Corporation (Announced)
1.55% ~ $ 9.84 | VELO - Velocity Acquisition Corp (Pre-Deal)
1.01% ~ $ 10.05 | HSAQ - Health Sciences Acquisitions Corporation 2 (Pre-Deal)
.98% ~ $ 9.76 | AEAC - Authentic Equity Acquisition Corp. (Pre-Deal)
.93% ~ $ 9.76 | SSAA - Science Strategic Acquisition Corp. Alpha (Pre-Deal)
.82% ~ $ 9.79 | PTIC - PropTech Investment Corporation II (Pre-Deal)
.82% ~ $ 9.86 | SPKB - Silver Spike Acquisition Corp II (Pre-Deal)
.79% ~ $ 10.23 | DCRB - Decarbonization Plus Acquisition Corp (Announced)
.72% ~ $ 9.80 | FRXB - Forest Road Acquisition Corp. II (Pre-Deal)
.72% ~ $ 9.85 | IACC - ION Acquisition Corp 3 Ltd. (Pre-Deal)
.71% ~ $ 9.98 | LUXA - Lux Health Tech Acquisition Corp (Pre-Deal)
.70% ~ $ 10.06 | SGAM - Seaport Global Acquisition Corp (Announced)
.57% ~ $ 10.58 | KVSB - Khosla Ventures Acquisition Co. II (Announced)
Recent Announced Mergers have Underperformed
Jul 13 | $ 9.94 | CBAH - CBRE Acquisition Holdings, Inc. --> Altus Power, Inc
Jul 13 | $ 9.96 | IVAN - Ivanhoe Capital Acquisition Corp --> SES Holdings
Jul 12 | $ 10.00 | LCAP - Lionheart Acquisition Corporation II --> MSP Recovery
Jul 09 | $ 10.02 | FPAC - Far Peak Acquisition Corp --> Bullish
Jul 08 | $ 9.91 | HCAQ - HealthCor Catalio Acquisition Corp. --> Hyperfine, Inc.
Jul 08 | $ 9.77 | HCCC - Healthcare Capital Corp. --> Alpha Tau Medical Ltd.
Jul 08 | $ 10.43 | CND - Concord Acquisition Corp --> Circle
Jul 07 | $ 9.92 | ATHN - Athena Technology Acquisition Corp. --> Heliogen
Jul 07 | $ 9.90 | DMYQ - dMY Technology Group, Inc. IV --> Planet Labs Inc.
Jul 06 | $ 9.85 | CFV - CF Acquisition Corp. V --> Satellogic
Jul 06 | $ 10.58 | KVSB - Khosla Ventures Acquisition Co. II --> Nextdoor, Inc.
Jul 01 | $ 9.93 | ISOS - Isos Acquisition Corp. --> Bowlero
More from Boardroom Alpha
More from Boardroom AlphaMore from Boardroom Alpha For ongoing tracking, analytics, and data on SPACs checkout Boardroom Alpha's SPAC Data and Analytics service.
- SEC, Gensler Lay the Hammer on Stable Road (SRAC) & Momentus
- LCAP Rises on MSP Deal, ASPL Sees Huge Redemptions in Wheels Up Vote
- Lionheart Acquisition (LCAP) Announces $32.6B SPAC Deal with MSP Recovery
- Nextdoor Leads the Way in Busy Merger Week
- Despite Higher Activity Level SPACs Showing Some Weakness
- SPAC Deal Announcement Pops and Warrants Surge
- Hyperfine, Circle, and Alpha Tau Healthcare Get SPAC Deals
- Pre-Deal SPACs are Cheap
- Two New SPAC Deals (DMYQ, ATHN)
- Khosla Ventures Acquisition II Soars on Nextdoor Deal
- Khosla taking Nextdoor Public in $4.3B Deal and CF Acquisition Announced Satellogic $850M Deal
- Weekly SPAC Wrap - July 2
- Bowlero Gets a $2.6B SPAC Deal
- Chamath's Bio SPACs Rise, WPF has Large Redemptions
- Stable Road (SRAC) Cuts Deal Valuation in Half -- Market Loves It
- SPACs Flat, LACQ and IACA Votes Pass
- 10 SPAC Deal Votes Close Out June
- De-SPACs Get Set to Join the Russell 3000
- Weekly Director/CEO/CFO Moves: Matthew Furlong Takes the Helm at GameStop & EBAY Gets a New CFO
- Churchill (CCIV) & Lucid Sets its Vote Date
- Spinning and Buzzing in SPAC-Land
- SPACs are Here to Stay
- FTOC and AACQ SPAC Deals Pass Shareholder Votes in an Otherwise Quiet Day
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report.)