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October 25, 2021
Welcome to the SPAC Research weekly newsletter.
IPOs and Anchor Orders
We've spent plenty of time recently looking at the SPAC IPO market and anchor orders. The market was effectively reset this summer, but IPOs are still getting done. However almost every sponsor at this point needs to either over-fund its trust account, or secure anchor commitments that shore up its IPO book.

Both of these methods are fairly expensive for the sponsor. If they over-fund the trust account, the entire amount above $10.00 per share comes out of the sponsor's pocket. So a $200mm SPAC IPO that required $6mm of risk capital with exactly $10.00 in trust might need roughly $10mm of risk capital at $10.20 of trust funding.

If the sponsor instead chooses to pay anchor investors for IPO commitments, they may end up using promote shares to reduce anchor investors' implied cost basis to roughly $9.50 per IPO unit (assuming a $10 value per promote share). If the entire IPO book is covered, anchor investors can end up with roughly a quarter of all promote shares.

The Q3 SPAC IPO picture reflects a balance between these factors. And as you can see below, last week's SPAC proceeds were the highest they've been in months.
You can also see that anchor commitments were lower last week than they were in early October. And the amount of IPO capital raised by non-anchor investors was significantly higher.

Does increased non-anchor investment mean conditions in the SPAC IPO market have changed?

Not really. Below you can see that the average initial trust value for SPAC IPOs moved above $10.15 last week. Sponsors are simply incentivizing non-anchor IPO investors with a higher guaranteed return.
There may be room in the SPAC equation for this trend to continue and for sponsors to share more of their economics with other parties. But regulators might be happier if those economics were shared with investors that make equity commitments on the deSPAC side rather than with arb players on the front end.

Meanwhile, many observers have likely noticed an interesting trend forming with IPO trading prices. We've plotted all the pre-deal SPAC IPOs since August (except for MEKA which is trading at $13), with the IPO cash in trust on the x-axis and the current market price of the units on the y-axis. Given how correlated SPAC yields are in general, it's not surprising there's a fairly strong relationship between the two.
But what's really interesting is just how dramatically anchor deals have underperformed non-anchor deals. We took the same chart as above but colored deals with greater than 75% anchor coverage in red and deals with less than 75% anchor coverage in green. We defined anchor coverage as the total amount of all indications of interest that were disclosed in the SPAC's prospectus, divided by the IPO size assuming full over-allotment.
You can see that almost all the anchor-heavy deals are below the trendline. If you were wondering whether a significant number of anchor investors are dumping supply on the market immediately after IPOs to free up capital and reduce their cost basis, the answer appears to be yes.

If you're shopping for yield, it's worth understanding why various pieces of the market are finding their equilibrium prices. It may be that credible sponsors whose float has largely changed hands represent an interesting value for SPAC yield players in the secondary market.

It's too soon to tell what impact the record-breaking Digital World Acquisition Corp. (DWAC) deal for Trump Media and Technology Group will have on the rest of the market. Anecdotally, it seemed like various corners of the SPAC world were perking up last Friday, with anything related to DWAC's CEO Patrick Orlando trading significantly higher. Will the DWAC deal usher in a new era of speculative investment in names without existing fundamentals attached? For now, the yield curve and warrant index remain mostly unchanged. But we'll look more deeply in coming weeks at how some SPAC market internals are evolving.


News From the Past Week

Deal News

  • Digital World Acquisition Corp. (DWAC) announced a deal to acquire Trump Media & Technology Group, which intends to launch a social network called "TRUTH Social." The deal reflects an enterprise value of $875mm with a potential additional earnout of $825mm in additional shares for a cumulative valuation of up to $1.7bn.

  • Horizon Acquisition Corporation (HZAC) closed its acquisition of Vivid Seats on Monday 10/18/2021. Redemption statistics were not provided. Ordinary shares and warrants are now trading on the NASDAQ as “SEAT” and “SEATW.”

  • GS Acquisition Holdings Corp II (GSAH) closed its acquisition of Mirion Technologies on Wednesday 10/20/2021with approximately 73.9% of public shares remaining. Ordinary shares and warrants are now trading on the NYSE as “MIR” and “MIR/W.”

  • Legato Merger Corp. (LEGO) closed its acquisition of Algoma Steel on Tuesday 10/19/2021 with less than 1% of public shareholders exercising redemption rights. Ordinary shares and warrants are now trading on the NASDAQ as “ASTL” and warrants are trading on the NASDAQ as “ASTLW” and on the TSX as “ASTL.WT.”

  • BowX Acquisition Corp. (BOWX) closed its acquisition of WeWork on Wednesday 10/20/2021 with 68.9% of public shares remaining. Ordinary shares and warrants are now trading on the NYSE as “WE” and “WE/W.”

  • Live Oak Acquisition Corp. II (LOKB) closed its acquisition of Navitas Semiconductor on Tuesday 10/19/2021. Redemption statistics were not provided. Ordinary shares and warrants are now trading on the NASDAQ as “NVTS” and “NVTSW.”

  • Alkuri Global Acquisition Corp. (KURI) closed its acquisition of Babylon on Friday 10/22/2021 with 10.6% of public share remaining. Ordinary shares and warrants are now trading on the NYSE as “BBLN” and “BBLN/W.”

  • Big Cypress Acquisition Corp. (BCYP) closed its acquisition of SAB Biotherapeutics on Friday 10/22/2021. Redemption statistics were not provided. Ordinary shares and warrants will trade on the NASDAQ as “SABS” and “SABSW” beginning Monday 10/25/2021.

  • Seaport Global Acquisition Corp. (SGAM) closed its acquisition of Redbox on Friday 10/22/2021 with 11% of public shares remaining. Ordinary shares and warrants will trade on the NASDAQ as “RDBX” and “RDBXW” beginning Monday 10/25/2021.

  • Reuters reported that SVF Investment Corp. 3 (SVFC) is in talks with Walmart Inc-backed robotics and automation company Symbotic.

  • Bloomberg reported that Ares Acquisition Corporation (AAC) is in talks with Equinox, owner of SoulCycle.

New S-1's
  • Rigel Resource Acquisition Corp. (RRAC) $250mm funded at 102%
  • Roman DBDR Tech Acquisition Corp. II (RDTX) $250mm funded at 100%
  • 7 Acquisition Corporation (SVAN) $200mm funded at 102%
  • Artemis Acquisition Corp. (ARAC) $200mm funded at 100%
  • DP Cap Acquisition Corp I (DPCS) $200mm funded at 102%
  • Generation Asia I Acquisition Limited (GAQ) $200mm funded at 101%
  • Talon 1 Acquisition Corp. (TOAC) $200mm funded at 102.5%
  • VMG Consumer Acquisition Corp. (VMGA) $200mm funded at 102%
  • Everest Consolidator Acquisition Corporation (MNTN) $150mm funded at 102%
  • Western Acquisition Ventures Corp. (WAVS) $150mm funded at 100%
  • Blue Water Acquisition Corp. II (BWTR) $75mm funded at 100%
  • Gardiner Healthcare Acquisition Corp. (GDNR) $75mm funded at 100%
  • Financial Strategies Acquisition Corp. (FXCO) $72mm funded at 101%
  • Mana Capital Acquisition Corp. (MANA) $60mm funded at 100%
IPOs

  • Iconic Sports Acquisition Corp. (ICNC) raised $300mm for an acquisition in global sports or an adjacent sector including data and analytics, media and technology. The trust account was funded at 102.5% and units contain one-half warrant coverage.

  • Enterprise 4.0 Technology Acquisition Corp. (ENTF) raised $300mm in an upsized IPO for an acquisition in the technology industry. The trust account was funded at 102% and units contain one-half warrant coverage.

  • M3-Brigade Acquisition III Corp. (MBSC) raised $261mm to acquire a company based in North America that has been impacted by the COVID-19 pandemic or a business in the renewable energy sector. The trust account was funded at 101% and units contain one-third warrant coverage.

  • ESGEN Acquisition Corporation (ESAC) raised $240mm for an acquisition in energy and infrastructure value chain and contiguous industries that will change the current energy landscape by accelerating a shift to a low-carbon future. The trust account was funded at 102% and units contain one-half warrant coverage.

  • GoGreen Investments Corporation (GOGN) raised $240mm for an acquisition in clean/renewable energy. The trust account was funded at 102% and units contain one-half warrant coverage.

  • Newcourt Acquisition Corp (NCAC) raised $220mm for an acquisition of financial services and financial technology businesses with exposure to emerging markets. The trust account was funded at 102% and units contain one-half warrant coverage.

  • Athena Consumer Acquisition Corp. (ACAQ) raised $200mm for an acquisition in technology-enabled consumer goods and/or services. The trust account was funded at 102% and units contain one-half warrant coverage.

  • ExcelFin Acquisition Corp. (XFIN) raised $200mm for an acquisition in fintech in the US. The trust account was funded at 102% and units contain one-half warrant coverage.

  • Pegasus Digital Mobility Acquisition Corp. (PGSS) raised $200mm for an acquisition in the next-generation transportation sector with exposure to energy transformation and digital mobility tailwinds. The trust account was funded at 101% and units contain one-half warrant coverage.

  • Worldwide Webb Acquisition Corp. (WWAC) raised $200mm for an acquisition of direct-to-consumer brands, Amazon-centric online marketplaces, food tech, new media, digital health, software-as-a-service, fintech, and any adjacent industries undergoing technology-driven transformations. The trust account was funded at 101% and units contain one-half warrant coverage.

  • Accretion Acquisition Corp. (ENER) raised $180mm in an upsized IPO for an acquisition of businesses involved in the energy value chain. The trust account was funded at 101% and units contain one-half warrant coverage and one right.

  • Global Technology Acquisition Corp. I (GTAC) raised $175mm in an upsized IPO for an acquisition of technology companies that operate in the marketplace, financial technology and software-as-a-service verticals within Europe, Latin America and the United States. The trust account was funded at 102% and units contain one-half warrant coverage.

  • NewHold Investment Corp. II (NHIC) raised $175mm for an acquisition in industrial technology. The trust account was funded at 101% and units contain one-half warrant coverage.

  • Thrive Acquisition Corporation (THAC) raised $150mm for an acquisition in global health and wellness. The trust account was funded at 102% and units contain one-half warrant coverage.

  • Fintech Ecosystem Development Corp. (FEXD) raised $115mm for an acquisition in fintech in South Asia. The trust account was funded at 101% and units contain one-half warrant coverage and one right.

  • SportsMap Tech Acquisition Corp. (SMAP) raised $115mm for an acquisition in Sports Tech (fan engagement, health and wellness, esports and fantasy sports and gambling). The trust account was funded at 102% and units contain three-fourths warrant coverage.

  • Blockchain Moon Acquisition Corp. (BMAQ) raised $100mm for an acquisition of blockchain technologies in North America, Europe, and Asia. The trust account was funded at 100% and units contain one-half warrant coverage and one right.

  • Industrial Human Capital, Inc. (AXH) raised $100mm for an acquisition of companies that provide staffing solutions to the light industrial sector in North America. The trust account was funded at 101.5% and units contain whole warrant coverage.


Upcoming Meetings and Deadlines
  • 10/26/2021 GRCY Meeting to re-appoint directors and ratify auditors
  • 10/26/2021 ALAC Liquidation deadline
  • 10/27/2021 GRNS Holdings, Futureworks, Theraplant and True Harvest approval meeting (liquidation date 11/13/2021)
  • 10/27/2021 TMTS NextNav approval meeting
  • 10/27/2021 MCAD Better Therapeutics approval meeting (outside date 10/31/2021)
  • 10/28/2021 TDAC Lottery.com approval meeting (outside date 10/31/2021)
  • 10/29/2021 MCMJ Charter extension meeting (liquidation date 11/7/2021)
  • 11/2/2021 KVSB Nextdoor approval meeting
  • 11/2/2021 MOTN DocGo approval meeting (outside date 11/8/2021)
  • 11/2/2021 RTPY Aurora approval meeting
  • 11/2/2021 AGBA Charter extension meeting (liquidation deadline 11/16/2021)
  • 11/2/2021 SWBK Bird approval meeting (outside date 11/6/2021)
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.