TLDR:
– The second quarter of 2023 saw the slowest quarter for SPAC deals since 2017, with only six SPAC IPOs raising just over a billion dollars.
– Despite the slowdown, the few SPACs that did go public were able to raise more money on average than their first-quarter counterparts.
Well, gather ’round folks, because the financial world’s got a new bedtime story for you. Once upon a time, there was a party. A SPAC party, to be exact. We’re talking Special Purpose Acquisition Companies. For those of you who prefer to spend your evenings doing something slightly less dull than reading about financial matters, these are essentially blank check companies designed to take companies public without going through the traditional IPO process. Quite the shindig, right?
However, according to a report from communications and advisory firm ICR, it seems the SPAC party may be winding down. The second quarter of 2023 saw the slowest quarter for SPAC deals since the first quarter of 2017. Six SPAC IPOs scraped together just over a billion bucks, a significant slowdown compared to previous quarters. I guess even the finance world isn’t immune to a hangover.
Now, it’s not all doom and gloom. Despite the fact that investors are nursing their SPAC-induced headaches, the few SPACs that did manage to stumble towards an IPO were actually able to raise more money on average than their first-quarter counterparts. It seems that, like a good whiskey, the quality of a SPAC is more important than the quantity. Who knew?
On the topic of mergers, the pace has slowed down a bit as well. Just ten companies managed to tie the knot with a SPAC in the second quarter of 2023. Sounds like the merger market could do with a bit of couples therapy. That said, it’s worth noting that the companies getting hitched aren’t just American sweethearts anymore. SPACs are increasingly looking overseas for their perfect match, with a majority of merger targets now based outside the US.
In the meantime, traditional IPOs have been going steady. There were 23 of them in the second quarter, raising a hefty total of $6.7 billion. That’s the highest quarterly revenue for a conventional IPO in the last six quarters, even if we ignore the exceptionally well-off J&J spin-off, Kenvue, which pulled in $3.8 billion all by its lonesome. I guess sometimes the old ways are the best ways.
Finally, let’s talk about the SPAC PIPE market – that’s Private Investment in Public Equity for those of you not fluent in financial jargon. Despite the SPAC slowdown, this market is still wide open for business, especially for quality companies and those with sponsor or affiliate support. It seems like the SPAC saga will continue to roll on, even if the party’s over.
So there you have it, the state of the SPAC market in 2023. It’s a bit like a rollercoaster ride after lunch – exciting, unpredictable, and maybe just a little bit nauseating. But hey, that’s finance for you.