SIFMA Insights Spotlight: Explaining SPACs and Analyzing Issuance Trends

With the number of IPOs down over the last few years as companies stay private longer, special purpose acquisition companies (SPACs) have grown in popularity as another tool to access capital.

This trend accelerated in 2020, with the turbulent economic times forcing companies to search for liquidity. SPACs have already had their biggest year to date, with $22.2B deal value through July – an increase of 65% year over year. As we look at the COVID-19 issuance recovery path, we find:

• Secondaries ($50.8B in May, +283% vs. start of year);
• IPOs ($14.7B in June, +414% vs. start of year); and
• SPACs ($10.3B in July, +599% vs. start of year).

In this spotlight report, we define SPACs, analyze issuance trends, and compare SPACs to IPOs and secondary offerings.

 

 

 

Author

Katie Kolchin, CFA
Director of Research
SIFMA Insights

Related Resources

• SIFMA Insights

  COVID-19 Related Market Turmoil: A Report Series

  In a two-part report, SIFMA Insights explores the impact of COVID-19 on the capital markets, analyzing market trends from the start of the year through mid-June. Part 1 delves into Equities, ETFs, Listed Options and Capital Formation, where we explain why market metrics will ebb and flow with each economic report or update on developing a virus vaccine. Part II delves into Fixed Income and Structured Products, where we show that market performance has been a mixed bag but improvement in market fundamentals is directly linked to Fed operations. Finally, discuss that while the financial system and market infrastructure have proved resilient and COVID-19 has largely remained a liquidity event, a resurgence of the virus could move us closer to a solvency one. Read on for Insights.

• Business Continuity Planning

  COVID-19 Updates

  SIFMA continues to closely monitor the novel coronavirus (COVID-19) and its impact on our industry and the capital markets. Here are resources for the industry, including instructions for financial services sector essential critical infrastructure workers, to maintain operational resiliency as well responses and unprecedented actions by industry regulators and more.