Bloomberg — SPAC sponsors are looking around the world for target companies as they scramble to meet deadlines amid the ongoing drought in the market for traditional initial public offerings.
At least 10 deals by special purpose acquisition companies with targets based outside the US have been announced since late February, accounting for nearly half of all blank-check company pacts over the period, according to data compiled by Bloomberg.
The shift comes as nearly 300 SPACs face deadlines in the coming six months and dozens of sponsors opt to throw in the towel and return cash to investors. And it’s all happening during the worst start to a year for equity capital markets in more than a decade.
Among the most recent announcements, Northern Revival Acquisition Corp. agreed to take Australia-based Braiin Ltd., an agriculture technology and analytic services company, public last month. And HCM Acquisition Corp. signaled plans to bring Mexico-based property-developer Murano PV to the public markets, pivoting away from targeting a financial firm. Deals completed since late February include Sao Paulo’s Lavoro and Israel-based HUB Cyber Security.
“Frankly, in the US the targets have been pretty much picked over,” Perrie Weiner, chair of Baker & McKenzie’s North America securities litigation group. “So the viable candidates are outside of the US.”
All told, nine of the 28 companies that have gone public through SPAC mergers this year are based outside of the US, according to data compiled by Bloomberg. The non-US companies have lost more than half of their value since their debuts, compared with a median drop of 45% for those based in the US, markedly lagging a 7.6% rise for the S&P 500 Index.
Some companies have used SPACs to spin off businesses to go public while other firms have merged with blank checks to switch the exchange they list on while raising cash. That shows the flexibility of the SPAC market, according to Dan Nash, co-founder and head of investment banking at Cohen & Company Capital Markets.
“There are a number of use cases where SPACs are an interesting way to access the markets,” Nash said by phone. “There are some really complex stories that are unique cases and fit the SPAC product. In a tough market like this, it’s an interesting and useful product.”