Why is the SPAC spigot tightening?

More than a few market analysts have declared that 2021 is the year of the SPAC. Otherwise known as a special purpose acquisition company or a blank check company, a SPAC is a publicly traded entity that exists solely to raise money and acquire an existing private company. SPACs have been a hot way for young companies to quickly go public and scoop up cash for growth. About half of all new IPOs by volume since January 2019 were SPACs, according to a February 2021 JP Morgan report. But Shares in businesses that went public through deals with “blank-cheque” companies have dropped by an average of two-fifths from their highs, as appetite for the once red-hot sector of the US stock market cools rapidly. The figures come from a Financial Times analysis of data from Refinitiv tracking Spacs that acquired businesses worth more than $1bn, and come against the backdrop of a wider US stock market rally that set a new high in the past week. So what the SPAC is all the fuss about? Michael Avery spoke to Ian Kirkman, Partner at Bowmans, who advised on the first SPAC to have listed on the JSE, Capital Appreciation, and independent market analyst Liston Meintjes.