Subscribe to SPAC Research for full access.
November 14, 2022

Liquidations and Risk Capital
Aside from the weak market conditions for all IPOs, one of the main stories of 2022 in SPACs is the ticking clock that forces sponsors to consider liquidating their vehicle.

After many years of exceptionally high completion rates, 2022 has seen almost 50 SPAC liquidations, with another 40 or so already planned for later this year. Many sponsors have accelerated their liquidation to avoid the potential impact of the excise tax. And Q1 of next year will see many more.
The financial media used to spend a lot of energy focusing on sponsors with outsized success stories, even if they didn't get their facts straight. But today we'll look at an opposing angle: the fact that SPAC sponsors are the ones who'll likely end up paying for last year's overenthusiasm for the SPAC product.

A $200mm SPAC cost the sponsor roughly $6mm-$9mm at IPO. We can use our risk capital database to translate the chart above to the amount of risk capital actually lost by this year's liquidating SPACs.

In the chart below, you can see that 2022's liquidations have cost sponsors more than $700mm.
As of 11/9/2022
That is a lot of money. But just how much risk capital have sponsors put up in the past few years?

We added all the risk capital put up by SPAC sponsors since 2015 so you can see it broken down by IPO year. In all, sponsors have committed more than $9.1bn since 2015. And more than half of that amount came in 2021, the biggest year ever for SPAC IPOs.
As of 11/9/2022
So how will things shake out for sponsors that ponied up risk capital in the past few years? We took the chart above and broke it down by current deal status to try and find out.
As of 11/9/2022
Almost all risk capital from 2020 and earlier turned into equity in a successful business combination. Most of that amount likely earned a decent multiple on its original investment -- though remember, sponsors have historically sacrificed on average one-third of their promote to facilitate deal completion.

(An aside on sponsor ROI: it's notoriously challenging to calculate. We've studied this issue before. Back in the bull markets of 2019 and 2021, the rising tide of the broader equity markets made it look like the median outcome was something like a 4x on initial investment. But remember sponsors are typically locked up for at least a year post-business combination. And the carnage across growth and technology names has clobbered sponsor return profiles, well before the majority of them ever had the chance for liquidity.)

Meanwhile, nearly $6bn worth of risk capital that's been deployed since the beginning of 2021 is sitting in limbo. A subset of these SPACs have closed deals already and a number have also decided to liquidate. But the majority is still either sitting in the "pre-deal" category or trying to get a business combination over the finish line in a challenging environment.

It's far too early to calculate what the current crop's eventual return profile will look like. But SPAC sponsors have always been the only party with meaningful risk of their investment going to zero. And it looks like many of the members of the largest ever class of SPACs will end up walking away with nothing.
News From the Past Week

Deal News

  • Murphy Canyon Acquisition Corp. (MURF) announced a deal to acquire Conduit Pharmaceuticals Limited, a clinical stage specialty biopharmaceutical company. The deal reflects an enterprise value of $700mm and includes a $27mm PIPE anchored by new and existing Conduit investors. The transaction is expected to close in Q1 2023.

  • Blockchain Coinvestors Acquisition Corp. I (BCSA) announced a deal to acquire Qenta, a fintech company established to digitize the world’s assets and transactions. The deal reflects an enterprise value of $622mm and includes a $180mm capital commitment from GEM Global Yield and a $120mm FPA with Vellar. The transaction is expected to close in 1H 2023.

  • NorthView Acquisition Corporation (NVAC) announced a deal to acquire Profusa, a digital health company that develops novel tissue integrated biosensors. The deal reflects an equity value of $416mm. No closing timeline was given.

  • Vickers Vantage Corp. I (VCKA) closed its acquisition of Scilex on Thursday 11/10/2022. Redemption statistics were not provided. Ordinary shares and warrants are now trading on the NASDAQ as “SCLX” and “SCLXW.”

  • East Stone Acquisition Corporation (ESSC) closed its acquisition of ICONIQ (“NWTN”) on Friday 11/11/2022. Redemption statistics were not provided. Ordinary shares and warrants are expected to trade on the NASDAQ as “NWTN” and “NWTNW” beginning Monday 11/14/2022.

  • AGBA Acquisition Ltd. (AGBA) shareholders approved the company’s acquisition of OnePlatform and TAG Asia at a meeting Thursday 11/10/2022 with 7% of public shares remaining. The transaction is expected to close upon satisfaction of all closing conditions.

  • 8i Acquisition 2 Corp. (LAX) shareholders approved the company’s acquisition of EUDA Health at a meeting Thursday 11/10/2022 with 5% of public shares remaining. No closing timeline was given.
New S-1's
Name Ticker Size ($mm) Underwriter Trust Funding Coverage
Pono Capital Three PTHR 100 EF Hutton 102.5% W
Alkaid Acquisition ALKD 50 Chardan 101.5% R


IPOs
Name Ticker Raised ($mm) Sector Cash in Trust Coverage
Plutonian Acquisition PLTN 50 General 101.8% W+R


Liquidations
Name Ticker Size ($mm) Announced Liq. Date Trust Per Share
Athlon Acquisition SWET 276 11/9/2022 12/1/2022 $10.06
JOFF Fintech JOFF 414 11/10/2022 TBD TBD
RXR Acquisition RXRA 345 11/10/2022 TBD TBD
Simon Property Group Acq SPGS 345 11/9/2022 TBD TBD
Glenfarne Merger GGMC 273 11/10/2022 TBD TBD

Registrations Withdrawn
Name Ticker Size ($mm) Underwriter Trust Funding Coverage
OS Acquisition Corp. OSAA 150 Citi 100.0% 1/3

Charter Extensions

  • LIBY extended its charter through 2/8/2023 with a single $0.10 per share sponsor contribution to trust.
  • LION extended its charter through 12/8/2022 with a single $0.033 per share sponsor contribution to trust.
  • MAQC extended its charter through 5/7/2023 with a monthly $0.045 per share sponsor contribution to trust and 20% of public shares remaining.
  • PONO extended its charter through 2/13/2023 with a single $0.10 per share sponsor contribution to trust.
  • NOVV extended its charter through 8/10/2023 with a monthly $0.0416 per share sponsor contribution to trust and 31% of public shares remaining.
  • AACI extended its charter through 2/17/2023 with a single $0.10 per share sponsor contribution to trust.
  • IRRX extended its charter through 2/16/2023 with a single $0.10 per share sponsor contribution to trust.

Upcoming Meetings and Deadlines

  • 11/14/2022 LMACA Charter extension meeting (liquidation deadline 1/26/2023)
  • 11/15/2022 KWAC Charter extension meeting (liquidation deadline 11/24/2022)
  • 11/15/2022 FLAC NewAmsterdam approval meeting (merger outside date 12/11/2022)
  • 11/15/2022 TINV Grindr approval meeting (merger outside date 12/31/2022)
  • 11/15/2022 ALSA Liquidation deadline (pending $0.033 deposit extension)
  • 11/15/2022 GAPA Liquidation deadline
  • 11/15/2022 ARBG Charter extension meeting (liquidation deadline 11/24/2022)
  • 11/16/2022 OXAC Liquidation deadline (pending $0.10 deposit extension)
  • 11/16/2022 CENQ Liquidation deadline
  • 11/16/2022 AGBA Liquidation deadline
  • 11/17/2022 GLBL Tiedemann Group and Alvarium Investments approval meeting (merger outside date 1/4/2023)
  • 11/17/2022 ACEV Tempo Automation approval meeting (merger outside date 12/13/2022)
  • 11/17/2022 MCAE Charter amendment meeting (liquidation deadline 11/20/2022)
  • 11/17/2022 IACC Charter amendment meeting (liquidation deadline 5/4/2023)
  • 11/18/2022 PTIC RW National Holdings approval meeting (liquidation deadline 12/8/2022)
  • 11/18/2022 ENCP Liquidation deadline (pending $0.10 deposit extension)
  • 11/20/2022 PHIC Liquidation deadline
  • 11/21/2022 OHPA Charter amendment meeting (liquidation deadline 3/4/2023)
  • 11/22/2022 FVT Charter amendment meeting (liquidation deadline 1/7/2023)
  • 11/22/2022 FVIV Charter amendment meeting (liquidation deadline 3/18/2023)
  • 11/22/2022 DWAC Charter extension meeting (liquidation deadline 12/8/2022)
  • 11/22/2022 IFIN Charter extension meeting (liquidation deadline 11/23/2022)
  • 11/22/2022 POND MariaDB Corporation Ab approval meeting
  • 11/22/2022 CNGL Charter extension meeting (liquidation deadline 12/2/2022)
  • 11/22/2022 AUS Charter amendment meeting (liquidation deadline 3/2/2023)
  • 11/22/2022 ARIZ Liquidation deadline (pending $0.10 deposit extension)
  • 11/22/2022 ASZ Charter amendment meeting (liquidation deadline 3/2/2023)
  • 11/23/2022 GBRG Charter extension meeting (liquidation deadline 12/4/2022)
  • 11/23/2022 JYAC Liquidation deadline
  • 11/23/2022 OTEC Charter extension meeting (liquidation deadline 12/2/2022)
  • 11/23/2022 BRLI Liquidation deadline
  • 11/24/2022 LAX Liquidation deadline (pending $0.10 deposit extension)
  • 11/27/2022 TINV Liquidation deadline
Links

  • Serial SPAC sponsors Betsy and Daniel Cohen will rename their “FinTech Masala” investment firm “Cohen Circle,” to reflect their diverse venture and SPAC investments.
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.

Did we miss something important? Please contact us.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.