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February 14, 2022
Welcome to the SPAC Research weekly newsletter.
Market Update
There's no sugar-coating it: SPAC market conditions remain brutal for any participant except those looking to put new dollars to work as a fixed-income alternative. The performance of recent deSPACs has been abysmal, and only 20% or so of closed deals since October 1, 2021 are trading above $10.
And the average redemption rate has climbed steadily to over 90% on deSPACs so far this month.
Redemption rate remains one of the best predictors of stock performance. But it's incredibly disheartening to see such a huge number of deals trading below their transaction price.
Many market observers love to bash the SPAC concept. And while deSPACs have traded poorly of late, we'll remind readers that a huge number of SPAC deals the past couple of years have been growth tech companies. The current moment in inflation and Fed policy has led an entire cohort of growth technology stocks to decline in value.

The IPOX SPAC Index and the ARK Innovation ETF (NYSE: ARKK) aren't comprehensive measuring sticks for deSPACs and growth tech companies. But you can see that the SPAC Index has significantly outperformed Cathie Wood's flagship fund over any recent timeframe.
In our mind, the big question is how tightly SPACs will remain tied to technology acquisitions and whether sponsors can find traction with value investments and more mature companies with current-year EBITDA.

Yields
On the front end for SPACs, the median yield for those that haven't announced a business combination has risen from 2.5% to over 3% since January 1.
Most of the movement in SPAC yields over the past couple of years has been volatility in the market's perceived value of the equity optionality on SPAC names. But the market is assigning near-zero value to the equity portion of SPAC common shares at this point. You can see from the individual points on the curve that only ten or so of the nearly 600 pre-deal SPACs are trading at a premium to cash in trust.
So this year's move in yields is mostly about adjusting to reflect the elevated expectation of interest earnings on SPAC trust accounts.
Still, if we zoom out we can see that yields are the highest in years except for the period during the original COVID liquidity crunch back in March 2020.
We saw last month that registration withdrawals are picking up as teams re-evaluate the risk/reward of sponsorship given increased costs and the challenging environment.

The pace of IPOs is also slowing. There were just 23 SPAC IPOs in January -- the lowest number since May 2021. And February is on a similar pace.
It's encouraging to see the supply of SPACs stop increasing. But market conditions have impacted the number of deal announcements and the amount of committed financing as well. February is on pace to be the weakest month for deal activity since the beginning of COVID.
And deal terminations are on the rise as shareholder redemptions demonstrate investors' disinterest in many of the recent SPAC deals.
How many teams are in over their heads? And how many will thread the needle between momentum stories and legitimate fundamentals to navigate successful business combinations?

As always, broad market weakness provides a challenging backdrop for SPACs. We'll be watching to see if sponsors can find winning strategies.
News From the Past Week

Deal News

  • DPCM Capital, Inc. (XPOA) announced a deal to acquire D-Wave, a developer of quantum computing technologies. The deal reflects an enterprise value of $1.35bn and includes a $40mm PIPE. The transaction is expected to close in Q2 2022.

  • Medicus Sciences Acquisition Corp. (MSAC) proposed an LOI to acquire Anteris Technologies, a structural heart company listed on the Australian Securities Exchange.

  • M3-Brigade Acquisition II Corp. (MBAC) and Syniverse mutually agreed to terminate their business combination agreement.

  • Atlantic Coastal Acquisition Corp. (ACAH) and Essentium mutually agreed to terminate their business combination agreement, with ACAH receiving cash payments TBD pending Essentium’s future sale and financing transactions.

  • CITIC Capital Acquisition Corp. (formerly CCAC) closed its acquisition of Quanergy Systems on Tuesday 2/8/2022 with 3.6% of public shares remaining. Ordinary shares and warrants are now trading on the NYSE as “QNGY” and “QNGY/W.”

  • SilverBox Engaged Merger Corp I (formerly SBEA) closed its acquisition of Black Rifle Coffee Company on Wednesday 2/9/2022 with 28.4% of public shares remaining. Ordinary shares and warrants are now trading on the NYSE as “BRCC” and “BRCC/W.”

  • Growth Capital Acquisition Corp. (formerly GCAC) closed its acquisition of Cepton Technologies on Thursday 2/10/2022 with 9.6% of public shares remaining. Ordinary shares and warrants are now trading on the NASDAQ as “CPTN” and “CPTNW.”

  • Thayer Ventures Acquisition Corporation (formerly TVAC) closed its acquisition of Inspirato on Friday 2/11/2022. Redemption statistics were not provided. Ordinary shares and warrants are expected to begin trading on the NASDAQ as “ISPO” and “ISPOW” on Monday 2/14/2022.

  • Novus Capital Corp II (formerly NXU) closed its acquisition of Energy Vault at a meeting Thursday 2/10/2022. Redemption statistics were not provided. The transaction is expected to close upon satisfaction of remaining closing conditions.

New S-1's
Name Ticker Size ($mm) Underwriter Trust Funding Coverage
Endeavor Acquisition ENAC 225 Cantor 102.0% 1/2

IPOs
Name Ticker Raised ($mm) Underwriter Cash in Trust Coverage
Aurora Technology Acq ATAK 200 Technology 101.0% W+R
Jaguar Global Growth I JGGC 200 Citi 102.0% 1/2
byNordic Acquisition BYNO 150 Stifel 102.0% 1/2
Relativity Acquisition RACY 125 A.G.P 102.0% W
Evergreen Corp EVGR 100 EF Hutton 101.5% W
LIV Capital Acquisition II LIVB 100 General 102.0% 3/4
Signal Hill Acquisition SGHL 100 B. Riley 102.0% 1/2
Counter Press Acquisition CPAQ 75 BTIG 101.5% 1/2
HNR Acquisition HNRA 75 EF Hutton 102.0% W

Registrations Withdrawn
Name Ticker Size ($mm) Underwriter Trust Funding Coverage
Crucible Acquisition III CRUB 350 CS 100.0% 1/4
Crucible Acquisition II CRUA 200 CS 100.0% 1/4
HighCape Capital II HCCR 200 CF 100.0% 1/4

Charter Extensions

  • AGBA extended its charter through 5/16/2022 with a single $0.15 contribution to trust.

Upcoming Meetings and Deadlines

  • 2/14/2022 ROCR QualTek approval meeting (merger outside date 2/16/2022)
  • 2/15/2022 HCCC Alpha Tau approval meeting
  • 2/15/2022 ASAX HotelPlanner and Reservations.com approval meeting (merger outside date 2/28/2022)
  • 2/17/2022 BWAC Liquidation deadline
  • 2/24/2022 ESSC Charter extension meeting (liquidation date 2/24/2022)
  • 2/25/2022 BREZ Liquidation deadline
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.
Copyright © 2022 SPAC Research, All rights reserved. SPAC Research is the source of all data unless otherwise noted.

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