The Daily Dish (6/25/21)
Welcome to the Daily Dish. We are your morning briefing for the SPAC market. Every day we’ll provide you a digest of the top headlines of the previous day and an outline of the day ahead.
Shareholders of Forum Merger III Corporation approved a proposed merger with Electric Last Mile. The company aims to reinvent the process of last mile delivery through efficient, connected and customisable solutions.
The company, which is headquartered in Troy, Michigan, is touted to have the first movers advantage in the space as customers seek out sustainable and efficient solutions.
The company’s first vehicle, the Urban Delivery, is expected to be the first Class 1 commercial electrical vehicle in the US Market.
The merger is expected to close on June 25, 2021 and the stock is expected to list on Nasdaq under the ticker symbol ‘ELMS’ on June 28, 2021.
Jim Chanos, who is best known for the collapse of Enron, believes that the current SPAC boom creates ‘castles in the sky’ and would be a pretty expensive lesson to investors. He believes that companies in the space are playing fast and loose with their projections, in an effort to attract retail investors.
Kynikos Associates, which is a hedge fund founded by the 63 year old, is betting against a number of SPAC companies, which he believes to have had very bad deals.
The criticism comes after scandals at several high-profile companies have begun to dampen the enthusiasm which has been generated by a boom which began in 2020.
Top tier mutual funds, private equity firms and retail investors have invested money in SPACs over the last 18 months. SPACs have raised over $100 billion globally, through 370 listings and there are currently over 400 SPACs looking for companies to buy.
The SPAC market may be losing steam with underwriting fees showing signs of being exhausted.
Analysts and Investors carefully watch the Credit Suisse SPAC transactions, which account for the majority of investment banking revenue last year. This has raised concerns that fees and transaction volumes may not be sustainable in the long run.
Credit Suisse’s total SPAC underwriting fees for the first quarter fell from $466 million to $16.1 million between April 1st and June 15th.
SPAC underwriting fees as a whole fell from a record $4.85 billion to $541 million, with other banks including Citigroup and Goldman Sachs Group seeing fees fall.