The momentum of the Special Purpose Acquisition Company (SPAC) shows no signs of slowing this year A number of high profile companies and investors have chosen this structure to raise billions of dollars. A SPAC or so-called “blank check company” has no commercial activities and is created solely to raise capital to purchase an existing business

This type of establishment gained a lot of momentum in 2020 as more than 50 SPACs raised billions of dollars in fact, SPACs outperformed traditional initial public offerings (IPOs) last year, bringing in more than $ 73 billion, according to Business Insider, citing Goldman Sachs Research

Goldman analysts expect the trend to continue this year, and we’re seeing reports from high-profile investors exploring the SPAC route, including WeWork, Elliott Management Corp.and former baseball star Alex Rodriguez this year, SPACs raised more than $ 38 billion through 128 initial public offerings, according to SPAC Research

After WeWork failed to go public in the more traditional fashion, WeWork is now reviewing additional options to go public and “ponder the offers of a Bow Capital Management LLC affiliate SPAC and at least one other unidentified acquisition vehicle for several weeks”” According to a report in the Wall Street Journal last month

Shake Shack Inc (SHAK) Founder Danny Meyers SPAC named USHG Acquisition Corp Bloomberg reported that it raised $ 250 million in an IPO last week from hedge fund Elliott Management Corp. The company plans to raise over $ 1 billion for its SPAC, according to a report in the Wall Street Journal on Sunday, and Alex Rodriguez is another household name who pounces on the SPAC platoon to start a shell company called Slam Corp. Business Insider Slam aims to raise $ 575 million, according to SEC filing

Going public on a SPAC continues to attract investor interest even if it increasingly looks like a bubble within a bubble, which gives its early investors and developers a structural advantage Research shows that “most SPACs lose money after finding a company they want to acquire and it is accelerating in the twelve months after a merger, “said The Edge Consulting Group

For some investors, the frenzy is reminiscent of dot-com-era speculation, “If done well, it’s a very effective transaction.It’s one of the few times the quote-unquote buyer has tremendous power,” said the billionaire and founder of Equity Group Investments, Sam Zell, told CNBC, noting that some target companies hadn’t forecast positive cash flow for years. “This is again widespread speculation, much like the dot-com boom,” he said

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World news – USA – To the moon: The SPAC frenzy will continue in 2021

Source: https://www.investopedia.com/to-the-moon-spac-frenzy-continues-in-2021-5105307