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PitchBook Analyst Note: SPAC Market Update: Q1 2021

Q2 2021

PitchBook Analyst Note: SPAC Market Update: Q1 2021

April 29, 2021

PitchBook Analyst Note: SPAC Market Update: Q1 2021
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SPACs are here to stay
 
A handful of downsized SPAC IPOs hinted at an oversaturation in the market toward the end of last year. However, with SPAC IPO activity continuing to explode so far in 2021, it seems that the blank-check boom is likely to adapt to any changes, and SPACs will remain a primary option for companies looking to go public. 
 
PitchBook's latest analyst note explores robust sample sizes of SPAC data to gain a sense of factors adding to the strategy’s momentum.

Key takeaways include:
  • Direct incentives are a primary motivator for SPAC sponsors; the structure grants them 20% of the SPAC equity, and the sponsors need only invest 2% to 5% of IPO proceeds in at-risk capital.
  • DeSPAC deals still lag the pace of new SPAC IPOs, confirming a multitude of SPACs are still actively looking for a target.
  • Widespread participation from SPAC sponsors in the accompanying PIPE deals has allowed them to have true skin in the game, signaling a long-term focus on improving the business they are taking public.