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January 4, 2021
Welcome to the SPAC Research weekly newsletter.

Year In Review
The year 2020 was transformative for the SPAC product, with 248 IPOs raising over $83bn.

SPACs represented approximately half the total US IPO market in 2020 and out-raised all previous years of SPACs combined. You can see the dramatic increase below.
Underwriter League
The issuance bonanza led to a banner year for SPAC bankers. Most of the constituents on 2020's Underwriting League Table far exceeded their previous year's results.

Credit Suisse led the way with over $13bn in league table credit. CS was on the cover of 41 deals in 2020, including all five Social Capital SPACs and all three of Bill Foley's deals.

Citigroup took second place, with 40 covers including all three of Michael Klein's IPOs and Pershing Square's $4bn deal. And Goldman Sachs rounded out the top three, with 31 covers including all three of Niccolo deMasi's offerings. Goldman Sachs also took the top spot on our DeSPAC Advisory Table, working on 17 closed deals worth over $46bn.

The bulge bracket was responsible for much of the year's growth in SPACs, representing 8 of the top 10 spots. Among mid-market banks, Cantor Fitzgerald and Jefferies were both on more than 20 covers and grew their presence measurably.

Seventeen banks earned more than $1bn in league table credit, up from just four in 2019, as the field broadened considerably over the course of the year.
Legal League
Six law firms dominated the Legal League Table, with Skadden edging out Kirkland & Ellis for the top spot. Both firms worked on over $20bn worth of SPAC IPOs, with Ropes & Gray not far behind. Kirkland & Ellis also claimed the top spot on our DeSPAC Legal Advisory Table, working on 14 deals worth over $27bn.

Ellenoff Grossman & Schole relinquished the top spot from previous years but still led all firms in deal count with 69. And White & Case rounded out the top five with over $15bn in transaction volume despite not logging their first deal until June after hiring the SPAC team away from Winston & Strawn.
Dry Powder and Deal Volume
The frantic pace of issuance has created a pool of almost $90bn in SPAC trust accounts -- almost four times what it was a year ago.
Remember: SPACs typically seek acquisition targets that are at least 3-5 times the size of their trust accounts. That means the active class of SPACs may eventually take public roughly $350bn worth of total enterprise value.

The year's bevy of exciting deals showed the world what an extremely successful SPAC outcome could look like. When a company like DraftKings trades well and is able to raise follow-on offerings at four times its transaction price, others take notice. Many SPACs were able to lean into the market's enthusiasm for electric vehicle and lidar deals. And SPAC transactions are enjoying a more constructive reception than ever before -- more than two-thirds of the 45 deals closed in the second half of 2020 are currently trading above $13!

Any company considering a public listing is now likely discussing a SPAC deal in board meetings. That's a dramatic change from just a year ago and likely means the explosion of SPAC activity -- see the $89bn worth of companies (shown below) that used the SPAC listing route in 2020 -- is just a starting point.
Market and Trading Dynamics
The year was extremely volatile for SPACs. A liquidity-driven selloff widened yields considerably during March's equity market nadir, with the median SPAC yielding almost 7% on 3/23/2020. As the broader market recovered through spring and summer, participants got more optimistic on SPAC deals. A flurry of well-received deal announcements drove the median yield negative in July and a massive year-end rally pushed the median yield on SPAC shares without a deal announcement to almost -3% on 12/28/2020!
Remember that historically, SPACs have traded at a discount to trust. Meanwhile at present, only 21 SPACs without a deal announced are trading below cash in trust per share.

Demand for warrants is similarly elevated -- the SPAC Research Warrant Index, which measures how much the market is willing to pay for SPAC warrants without an announced transaction, is pushing all-time highs again.
Given robust demand, the SPAC IPO pipeline currently sits at 81 deals that are looking to raise almost $19bn. The 2019 year in review note from last January where we pointed out an $850mm IPO pipeline with an eye on how much activity was coming seems quaint.

We also observed last January that SPACs were getting more expensive and wondered when sponsors would start trying to reduce their warrant coverage. Little did we know the market would get so hot that billion-dollar SPACs could price with 1/4 warrant coverage or less and 11 SPACs -- mostly from the healthcare and biotech vertical that has a concentrated base of fundamental investors -- would be able to price IPOs without any warrant coverage at all last year.
2021 Outlook
It would be a lot to ask for this year's front-end SPAC issuance to outdo last year's. Conditions for issuance remain relatively sensitive to back-end trading performance. There were multiple moments just in Q4 2020 that looked quite challenging for issuers not firmly situated in the top tier of SPAC sponsors. But given SPACs' place among public listing alternatives, it seems likely that we'll continue to see a robust pipeline of IPOs.

On the back end, we'll be keeping a close eye on how SPACs are intertwined with electric vehicle and lidar deals. And we'll be watching the first year of operating results from SPACs that acquired growth-stage companies. A traditional venture capital portfolio may be able to accept a number of zeroes if a single home run outcome can return multiples of the entire fund. But public market investors can't afford a hit rate like that. Hopefully anybody who owns a basket of deSPACs is doing careful diligence on their investments.

One thing is for certain -- lots of SPACs are sitting on huge amounts of trust account capital, with great teams motivated to make interesting deals. There will likely be more deSPACs in 2021 than there were in 2020. Hopefully they continue to find supportive end markets and deliver successful business combinations.


News From the Past Week

New S-1's

  • Thoma Bravo Advantage (TBA) filed to raise $900mm for an acquisition in software. Chairman Orlando Bravo is a founder and managing partner of Thoma Bravo, a software-focused private equity investment firm with $74bn of assets under management. CEO Robert Sayle is also a partner at Thoma Bravo. Citigroup, Deutsche Bank and Goldman Sachs are joint book-runners.

  • Pontem Corporation (PNTM) filed to raise $375mm for an acquisition in the industrial and technology sectors. Chairman and CEO Hubertus Muehlhaeuser was the CEO of CNH Industrial, a producer of agricultural and construction equipment that generated $28bn in revenue during 2019. Lead Director Burak Alici is the CEO of QVIDTVM Management, a private investment firm and an affiliate of PNTM, with which it will enter into an FPA worth $50mm to $150mm. Credit Suisse and Guggenheim are joint book-runners.

  • Centricus Acquisition Corp. (CENH) filed to raise $250mm for an acquisition in Europe. Chairman Manfredi Lefebvre d’Ovidio is chairman of Heritage Group, a diversified conglomerate with interests in the cruise industry, property and financial investments. CEO Garth Ritchie leads the capital markets and advisory business of Centricus, a London-based global investment firm, and is the former head of equities for Deutsche Bank's global markets executive committee. Deutsche Bank and Barclays are joint book-runners.

  • TZP Strategies Acquisition Corp. (TZPS) filed to raise $250mm for an acquisition in technology services, business services and consumer products and services. CEO Samuel Katz is the founder of TZP Group, an investment adviser with $1.9bn of committed capital and an affiliate of TZPS’s sponsor. President Kenneth Esterow is a partner in TZP’s portfolio operations group and was the former CEO of Bankrate, Inc. (NYSE: RATE) until its sale to Red Ventures in 2017. Credit Suisse is sole book-runner.

  • Class Acceleration Corp. (CLAS) filed to raise $225mm for an acquisition in edtech. Co-Chair Joseph Parsons formerly served as the CEO of four business units at GE between 1997 and 2010 and was a member of the management committee at asset management firm Bridgewater Associates. Co-Chairman Robert Daugherty serves as dean of the Forbes School of Business & Technology and is a member of the investment committee for Hudson Pacific Group, a multi-family office. CEO Michael Moe is the founder and CEO of GSV Asset Management, a growth-focused investment platform based in Silicon Valley. Oppenheimer is sole book-runner.

  • Queen’s Gambit Growth Capital (GMBT) filed to raise $225mm for an acquisition in clean energy, healthcare, fintech, industrials, mobility and emerging technology. CEO Victoria Grace is a founding partner of Colle Capital Partners I, an early stage technology venture fund. Grace will lead an all-female team that includes CFO Anastasia Nyrkovskaya, the current CFO of Fortune Media and former CFO of Birchbox Inc. and XpresSpa Group, Inc. (NASDAQ: XSPA). Barclays is sole book-runner.

  • Ark Global Acquisition Corp. (ARKI) filed to raise $200mm for an acquisition in consumer internet and marketplaces, healthtech, fintech and mobility. CEO Richard Williams was the CEO of Groupon (NASDAQ: GRPN) from 2015 to 2020. Co-Sponsor and Advisor Jonathan Huberman was chairman, CEO, and CFO of Software Acquisition Group Inc. (SAQN), which raised $150mm in November 2019 and acquired global media company CuriosityStream (NASDAQ: CURI) in October 2020. Huberman served those same roles for Software Acquisition Group Inc. II (SAII), which raised $173mm in September 2020 and is currently seeking an acquisition in software. Jefferies is sole-bookrunner.

  • Biotech Acquisition Company (BIOTU) filed to raise $200mm for an acquisition in healthcare, with a particular focus on life sciences/biotechnology, healthcare information technology, medical technology and technology-enabled healthcare services. CEO and Chairman Michael Shleifer is the co-founder of SPRIM, a life sciences advisory firm. Schleifer will lead a team from SPRIM which is also the SPAC's sponsor. Cantor Fitzgerald is sole book-runner.

  • Bridgetown 2 Holdings Ltd (BTNB) filed to raise a $200mm warrantless SPAC with a focus on technology, financial services, or media in Southeast Asia. The SPAC is a sequel to Bridgetown Holdings Limited (BTWN), which raised $595mm in October 2020 and is currently seeking an acquisition in those same sectors. Advisor Kenneth Ng serves as CEO and president of Malacca Straits Acquisition Company Limited (MLAC), which raised $144mm in July 2020 and is currently seeking an acquisition in Southeast Asia. Citigroup and BTIG are joint book-runners.

  • Edify Acquisition Corp. (EACC) filed to raise $200mm for an acquisition in education, edtech, workforce development, and human capital management in the United States. Chairperson Susan Wolford worked at BMO Capital Markets from April 2003 to July 2020, most recently as the vice chair after serving as the head of the technology and business services group. CEO Peter Ma is a partner and managing director at Colbeck Capital Management, LLC, a middle-market private equity asset manager focused on strategic lending and an affiliate of the SPAC’s sponsor. BMO and B. Riley are joint book-runners.

  • Hudson Executive Investment Corp. II (HCII) filed to raise $200mm for an acquisition of a technology-driven, disruptive company. HCII is a sequel to Hudson Executive Investment Corp. (HECC), which raised $414mm in June 2020 and is currently seeking an acquisition in fintech and healthcare. The SPAC includes a $50mm FPA with HEC Master fund, an affiliate of Hudson Executive Capital, a value-oriented, event-driven investment firm co-founded by HCII’s CEO Douglas Bergeron and chairman Douglas Braunstein. Citigroup, JP Morgan and Barclays are joint book-runners.

  • Oyster Enterprises Acquisition Corp. (OSTR) filed to raise $200mm for an acquisition in media, technology, consumer products, industrials, real estate, real estate services, financial services, hospitality and entertainment. CEO Heath Freeman is a founding member of Alden Global, an investment advisory firm and an affiliate of OSTR. Chairman Randall Smith is the chief of investments at Alden and a founding member as well. Imperial Capital is sole book-runner.

  • Virtuoso Acquisition Corp. (VOSO) filed to raise $180mm for an acquisition in media companies within the digital marketing, digital platforms, subscription, and ad tech sectors. CEO Jeffrey Warshaw founded a number of media businesses including Connoisseur Communications Partners, an owner and operator of radio stations sold to Cumulus Broadcasting for over $250mm in 2000, and Connoisseur Media, a media company with radio, streaming, and digital advertising businesses. Warshaw serves on the boards of the National Association of Broadcasters and the Broadcasters Foundation of America, and is chairman of the Nielsen Audio Advisory Council. BTIG and Moelis are joint book-runners.

Deal News

  • FinTech Acquisition Corp. IV (FTIV) announced a deal to acquire Perella Weinberg Partners, a global independent advisory firm. The deal reflects an equity value of $975mm and includes a $125mm PIPE led by Fidelity Management & Research Company and Wellington Management. The transaction is expected to close in 1H 2021.
  • InterPrivate Acquisition Corp. (IPV) secured $200mm in additional PIPE commitments in connection with its deal to acquire lidar manufacturer Aeva with shares being sold at prices $11.50 and above.

  • Landcadia Holdings II, Inc. (LCAH) closed its acquisition of Golden Nugget Online Gaming on Tuesday 12/29/2020 with less than 1% of public shares exercising redemption rights. Ordinary shares and warrants are now trading on the NASDAQ as “GNOG” and “GNOGW.”

  • Live Oak Acquisition Corp. (LOAK) closed its acquisition of Danimer Scientific on Tuesday 12/29/2020. Redemption statistics were not provided. Ordinary shares and warrants are now trading on the NYSE as “DNMR” and “DNMR/W.”

  • dMY Technology Group, Inc. (DMYT) closed its acquisition of Rush Street Interactive on Tuesday 12/29/2020. After redemptions at the approval meeting, approximately $240mm remained in the trust account at deal closing. Ordinary shares and warrants are now trading on the NYSE as “RSI” and “RSI/W.”

  • RMG Acquisition Corp. (RMG) closed its acquisition of Romeo Power with no public shares exercising redemption rights. Ordinary shares and warrants are now trading on the NYSE as “RMO” and “RMO/W.”

  • Tottenham Acquisition I Limited (TOTA) closed its acquisition of Clene Nanomedicine at a meeting Wednesday 12/30/2020. Redemption statistics were not provided. Ordinary shares and warrants are now trading on the NASDAQ as “CLNN” and “CLNNW."
Upcoming Meetings and Deadlines
  • 1/6/2021 IPOC Clover Health approval meeting
  • 1/12/2021 SCPE Charter extension meeting (liquidation date 1/16/2021)
  • 1/12/2021 SMMC Billtrust approval meeting
  • 1/13/2021 SSPK Charter extension meeting
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