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ANALYSIS: SPACs Rise to Parity With Traditional IPOs During Q3

Oct. 7, 2020, 8:24 AM

SPAC IPOs firmly crossed over from a niche mania to mainstream in the third quarter. Initial public offerings for special purpose acquisition companies, or SPACs, have essentially reached parity with traditional IPOs in both count and capital raised—an astounding rise for a once-shunned investment vehicle.

SPACs Already Tripling 2019 Fundraising Totals

Last year, the IPO market raised $69.9 billion on 249 deals, with traditional IPOs raising $56.3 billion on 190 deals. SPAC IPOs raised $13.6 billion on 59 deals, representing 23.7% of the count and 19.4% of the value of all IPOs in 2019. 2020’s IPO totals have already exceeded last year’s results, with 293 IPOs raising $106 billion reported so far this year. SPACs have completed 118 of those IPOs during this time frame, raising $44.1 billion—more than triple its haul in 2019. Through Q3, IPOs by SPACs comprise 40.3% of the market by count and 41.6% by value.

SPACs Pull Even With Traditional IPOs in Q3 Deal Value

SPAC totals get even better when we look at the third quarter alone. In a blistering quarter for IPOs generally, SPACs were hotter than hot. SPAC IPOs raised $32.1 billion on 81 deals, versus $32.9 billion on 92 deals for traditional IPOs. They matched evenly with traditional IPOs, garnering 46.8% of the IPO market’s deal count and 49.4% of its deal value. SPACs actually raised more capital ($10.9 billion) in July than traditional IPOs ($8.3 billion); they matched traditional IPOs deal-for-deal with 26 apiece in August; and the exceeded by one traditional IPO’s total of 36 deals in September.

The acceleration of SPAC IPO growth during the third quarter is evident from the graph above. The number of SPAC IPOs rose steadily and appreciably, although deal value maintained a range of $10.2-$11.0 billion. SPACs are now the IPO market’s most significant driver of growth.

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