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May 17, 2021
Welcome to the SPAC Research weekly newsletter.

New SPAC Alpha Features
We're excited to announce two new features over at SPAC Alpha: the market Heat Map and our Investment Ideas filter! They are great new ways to visualize daily activity in the broader SPAC universe or within SPAC status, sector and geography filters.


Closed Deals by Sector
Much of the enthusiasm for SPACs over the past year has been driven by electric vehicle and lidar deals. VectoIQ Acquisition Corp. announced its transaction for electric truck-maker Nikola Motors in March 2020 and for almost a year afterward, any SPAC deal that merely mentioned "electric vehicles," "battery technology," or "lidar" was met with critical acclaim.

But the shine has since faded from EV deals. Tesla (NASDAQ: TSLA) is at least 25% off its highs from February 2021, and most EV manufacturers are down more than that. Sponsors can no longer count on a pop to the mid-teens just for announcing an EV deal, and the highest flyers of the group (in particular Churchill IV / Lucid Technologies) are well over 50% off their highs of the year from February.

Many EV-focused SPAC deals are trading below $10 and it may not surprise readers to learn that automotive is no longer the strongest performing sector among recent deSPACs.
*As of 5/13/2021; Materials(2), Cannabis(2) and Travel/Hospitality(5) sectors omitted for small sample size
Food is the strongest performing sub-category of closed deals, with a median price of nearly $14. (Food as a sector has been quite strong lately.) Automotive is near the bottom, with a median price around $8. It stands in stark contrast to automotive SPAC deals' median 52-week high of over $30.
*As of 5/13/2021; Materials(2), Cannabis(2) and Travel/Hospitality(5) sectors omitted for small sample size
It's also interesting to see technology at the bottom, although our sector classification choices often steer deals away from technology ("fintech" deals are usually categorized as financial, for example). This category is also weighed down by a number of smaller international deals that have performed poorly.

The underperformance among automotive deals is especially unfortunate given that those have been the largest deals. It's a delicate intersection with no shortage of market commentators decrying a bubble this year in both electric vehicles and SPACs.

We'll leave it as an exercise to the reader to assess bubble status in electric vehicles. But it seems rather silly to us to describe the enthusiasm we saw in February for SPACs (median yields peaking around -5%, or $10.50 per share for a SPAC with $10.00 in trust and one year remaining) as a bubble.

Nevertheless, the median automotive SPAC deal in recent years was over $1.5bn in enterprise value, making the current poor performance of those deals more painful.
So what's next?

There are 421 SPACs pursuing a business combination. While sector focus is typically flexible and sponsors have the leeway to change, here's what the current class of SPACs is nominally looking for:
We recently adjusted the categories somewhat, so the pie charts look a bit different from the last time we reviewed sector focus. But the takeaway is the same: more than half of all SPAC capital is controlled by generalists or by those with a focus on technology.

We can't know what sectors of the market will be hottest in the future, or how much the converging themes of the reopening trade, the potential rotation from growth to value, and the return of inflation will continue. But we know it's hard to be a contrarian in SPACs, and even though sentiment seems bleak right now, the best deals will go to wherever the market is most enthusiastic.


News From the Past Week

Deal News

  • Soaring Eagle Acquisition Corp. (SRNG) announced a deal to acquire Ginkgo Bioworks, a biotech company specializing in using genetic engineering to produce bacteria with industrial applications. The deal reflects an enterprise value of $15.2bn and includes a $775mm PIPE led by Baillie Gifford, Putnam Investments and Counterpoint Global (Morgan Stanley Investment Management). The transaction is expected to close in Q3 2021.

  • Aurora Acquisition Corp. (AURC) announced a deal to acquire Better, a digital-first homeownership company whose services include mortgage, real estate, title, and homeowners insurance. The deal reflects an enterprise value of $6.7bn and includes a $1.5bn PIPE committed entirely by affiliates of SoftBank (a previous investor in the company) and AURC's sponsor. The transaction is expected to close in Q4 2021.

  • Austerlitz Acquisition Corporation I (AUS) announced a deal to acquire Wynn Interactive, the online gaming division of Wynn Resorts. The deal reflects an enterprise value of $3.2bn and Cannae Holdings, Bill Foley's investment holding company, has agreed to fully backstop any redemptions. The transaction is expected to close by the end of the year.

  • Hennessy Capital Investment Corp. V (HCIC) announced a deal to acquire Plus, a global provider of self-driving truck technology. The deal reflects an enterprise value of $2.47bn and includes a $150mm PIPE with investors including BlackRock and the D. E. Shaw group. The transaction is expected to close in Q3 2021.

  • Switchback II Corporation (SWBK) announced a deal to acquire Bird Rides, an electric scooter ride-sharing company. The deal reflects an enterprise value of $2.3bn and includes a $160mm PIPE with investors including Fidelity Management & Research Company. The transaction is expected to close in Q3 2021.

  • Star Peak Corp II (STPC) announced a deal to acquire Benson Hill, Inc., a food technology company with plant-based protein solutions. The deal reflects an enterprise value of $1.4bn and includes a $225mm PIPE with investors including BlackRock, Van Eck Associates Corporation and Hedosophia. The transaction is expected to close in Q3 2021.

  • Centricus Acquisition Corp. (CENH) announced a deal to acquire Arqit Limited, a quantum encryption technology company. The deal reflects an enterprise value of $1bn and includes a $71mm PIPE with investors including Heritage Group, Virgin Orbit and Sumitomo Corporation. The transaction is expected to close in Q3 2021.

  • LIV Capital Acquisition Corp. (LIVK) announced a deal to acquire AgileThought, a pure play provider of agile-first software at scale, end-to-end digital transformation and consulting services to Fortune 1000 customers. The deal reflects an enterprise value of $482mm and includes a $43mm PIPE with investors including LIV Capital. The transaction is expected to close in Q3 2021.

  • The Wall Street Journal reported that 7GC & Co. Holdings Inc. (VII) is in talks with Vice Media.
  • Reuters reported that Thyssenkrupp (TKAG.DE) is considering an IPO or a SPAC deal for its hydrogen business.
New S-1's
IPOs

  • Artisan Acquisition Corp. (ARTA) raised $300mm for an acquisition in healthcare, consumer and technology in Greater China. Units contain one-third warrant coverage.

  • Osiris Acquisition Corp. (OSI) raised $230mm for an acquisition in consumer, retail and leisure. Units contain one-half warrant coverage.

  • Orion Biotech Opportunities Corp. (ORIA) raised $200mm for an acquisition in biotechnology and life sciences. Units contain one-fifth warrant coverage.


Charter Extensions
  • THCB extended its charter through 7/31/2021 with no sponsor contribution to trust.
  • AGBA extended its charter through 8/16/2021 with a single $0.15 per share contribution to trust.
  • SRAC extended its charter through 8/13/2021 with no contribution to trust and less than 1% of public shareholders exercising redemption rights.
  • GXGX extended its charter through 7/31/2021 with no sponsor contribution to trust and 56% of public shareholders exercising redemption rights, leaving approximately $128mm in trust.
Upcoming Meetings and Deadlines
  • 5/18/2021 ATAC Owl Rock Capital and Dyal Capital approval meeting
  • 5/18/2021 ZGYH Liquidation deadline (optional sponsor extension)
  • 5/19/2021 ZNTE Liquidation deadline (optional sponsor extension)
  • 5/21/2021 GRNV Liquidation deadline (charter extension meeting held 5/12/2021)
  • 5/24/2021 BRPA NeuroRx approval meeting (liquidation deadline 5/24/2021)
  • 5/24/2021 ESSC Liquidation deadline (optional sponsor extension)
  • 5/27/2021 IPOE SoFi approval meeting
  • 5/27/2021 TINV Liquidation deadline (optional sponsor extension)
  • 5/28/2021 STIC BARK approval meeting
Disclosures: Site administrators may maintain positions in various SPAC securities and may trade in or out of those securities at any time without notice. Information from spacresearch.com is provided for informational purposes only and should not be relied upon as the basis for any investment decision. Nothing on spacresearch.com is a recommendation or solicitation to buy or sell any investment.