The SPAC market is seeing a flurry of activity just before the end of 2022.
By year end, almost $45 billion worth of special purpose acquisition companies will have been liquidated, according to a new report from SPAC Insider. And there is likely more to come in 2023.
This week 18 SPACS are holding votes to liquidate ahead of schedule, and another nine are voting for early liquidation next week, according to SPAC Insider. That will bring the total number of liquidations in 2022 to 127. Only 96 deals were completed this year, while 450 SPACs are still looking for partners.
The vast majority of the liquidations have come in the last quarter of the year, which coincides with the big boom in issuance in December of 2020 and the 24-month deal deadline of most SPACs.
In addition, this week 25 SPACs are holding votes to extend their deadlines to complete a deal, and another 45 are voting for extensions next week, just ahead of the Christmas holidays.
“If you thought it was difficult to keep up with all the IPO pricings during the SPAC boom of Q1-2021, December 2022’s votes just said, ‘hold my beer,’” said Kristi Marvin, the founder of SPAC Insider. “We’ve got extension votes adjourning, SPACs holding early liquidation votes, deals with completion votes but not yet closed and in limbo, liquidation announcements buried in previously filed 10-Qs, and the list goes on.”
Big deals are continuing to fall apart. Last week former Barclays CEO Bob Diamond canceled the deal his SPAC Concord Acquisition Corp. made with Circle, a stablecoin issuer whose investors included Cathie Wood’s Ark Investment Management. The New York Stock Exchange delisted the SPAC’s warrants. (Once lucrative, today most SPAC warrants are trading under 5 cents.)
Concord had a December 10 liquidation deadline, but it was extended until January 31, giving the SPAC a mere six weeks to find a new merger partner. Concord has two other newer SPACs also shopping for deals.
It won’t be alone. When the year ends, about 400 SPACs will still be looking for deals, according to SPAC Insider. “There will most likely be additional liquidations in Q1 2023,” said Marvin.
Redemption levels are also extraordinarily high. When investors voted to extend their liquidation deadlines, the vast majority chose to redeem early. During September, October, and November, such redemptions averaged 84 percent.
