Repeat Spac sponsors will attract best targets
Eagerly courted high-growth private companies will likely go to experienced Spac sponsors that know the route to high valuations.
When large investment banks report results for the first quarter of 2021, any of them that delivers weak revenues from equity capital markets (ECM) should brace for a backlash.
Dealogic numbers show that by mid March issuers had launched 557 IPOs worth $157 billion this year. Citi notes that a usual year would see around 100 to 200 by this point. They are a bigger source of revenues than M&A or debt capital markets (DCM).
The largest market has been the US, which accounts for $100 billion of that total with 303 deals. Of these, 74% relate to special purpose acquisition companies.
Last year, Spacs raised $83.3 billion, up from $15.5 billion for 2019 and an annual average of just $6 billion for the last decade. In just the first two-and-a-half months of 2021, they have already raised $47 billion.
The Spac business may look like the Wild West today … but expect it to institutionalize soon
Credit Suisse will be the biggest winner here, with a commanding market share ahead of second-ranked Goldman Sachs.