SPAC Year
Benzinga.com dubbed 2020 the “Year of the SPAC.” But a glance at recent filings shows that 2020 was just the beginning of a meteoric rise in popularity. More than $30 billion was raised through SPACs in the first quarter of 2021. Several large SPACs were registered in January, including Fifth Wall Ventures, Intel Chairman Omar Ishrak, and the Gores Group founded by Alex Gores.
Meanwhile, office-sharing giant WeWork announced plans to go public via a SPAC in March after its planned IPO fell through in October 2019. Stanford University professor Michael Klausner told the New York [… WeWork’s] business model, and those concerns may be difficult to address in an IPO roadshow.”
SPACs are particularly attractive for cutting-edge technologies and new models backed by visionaries that have large war chests but little performance data. A recent example is Joby Aviation, a flying taxi company backed by Toyota, and British investment manager Baillie Gifford.
Another example is MoneyLion, a fintech platform that provides spain mobile database mobile banking services. The company merged with Fusion Acquisition Corporation in February in a transaction valued at $2.4 billion with gross proceeds of $500 million.
SPACs and IPOs
Traditional IPO
An IPO is a major move for a private company. It allows the company to obtain a large amount of capital for expansion without taking on debt. In exchange for the capital, the company's status changes from private to shareholder-owned.
While global IPO activity slowed significantly at the start of the pandemic (deal volumes fell 48% in April and May compared with the same period in 2019), appetite has quickly returned. In fact, according to Baker Mackenzie , 2020 has seen the highest IPO fundraising activity in a decade.