SPAC Firms Rush To Liquidate ... Has The Boom Ended?

Since the beginning of December, around 70 special-purpose acquisition companies (SPACs), have liquidated and returned the money to the investors.

A SPAC firm, a.k.a blank-check company, raises money to merge with a private company to take it public. After regulatory scrutiny, the company going public replaces the SPAC in the stock market. 

According to data from SPAC Research, SPAC creators have lost more than $600 million on liquidations this month and more than $1.1 billion this year.

Related: Peter Thiel-Backed Crypto Exchange Bullish Exits SPAC Deal Over New SEC Practices.

SPAC frenzy approached its end amid fewer deal prospects and looming tax bills. Around four SPACs pulled their shutters down daily, nearly at the same rate they were being launched when the sector peaked in early 2021.

Several more SPACs would be winding down in the coming weeks, Wall Street Journal wrote, hurting some of their backers such as Chamath Palihapitiya, Alec Gores, Gary Cohn and Wall Street firms such as KKR & Co Inc KKR and TPG Inc TPG

In September, Palihapitiya liquidated two SPACs citing valuation and volatility as the two biggest reasons.

Another roughly 150 SPACs holding about $25 billion have reached merger agreements but haven't closed, including Digital World Acquisition Corp DWAC, the SPAC that was hoping to merge with former President Donald Trump's social-media company, wrote the Wall Street Journal, citing SPAC Research.

Also Read: Here's How Much Marjorie Taylor Greene Has Lost On Her Trump SPAC Investment

Photo: zimmytws via Shutterstock

Market News and Data brought to you by Benzinga APIs
Posted In: NewsSmall CapTop StoriesGeneralSPACSPACsspecial purpose acquistion company
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!