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- Mergers through blank-check companies are an increasingly growing share of the M&A market, with first-quarter volume already exceeding that seen in all of 2020.
- There were $166 billion in SPAC-led deals announced in the first quarter, Bloomberg reported, citing Morgan Stanley's SPAC M&A practice head.
- About 400 SPACs are looking for deals.
- See more stories on Insider's business page.
Mergers conducted through blank-check companies are accounting for a growing share of the M&A market, with deals made so far this year outpacing the volume recorded last year.
There were $166 billion in deals via special purpose acquisition companies announced in the first quarter, Bloomberg reported on Friday, citing Kristin Zimmerman-Sorio, the head of Morgan Stanley's SPAC M&A practice who spoke at a virtual conference Thursday.
That amount of SPAC activity represents about 30% of deal volume when compared with overall deal volume today, she said.
A SPAC is a company created to merge or acquire another business and take it public and they are considered as a faster and less expensive alternative to an initial public offering or IPO.
This year, the list of pending deals includes Joby Aviation, a California venture developing electric aircraft to be used as air taxis. Joby plans to go public with a $6.6 billion valuation. Joby is to be taken public by Reinvent Technology Partners and listed on the New York Stock Exchange.
Wall Street this week was keeping tabs on ride-hailing company Grab which, according to The Wall Street Journal, was in talks to go public with Altimeter Capital in a $40 billion deal. That deal if completed would be the biggest SPAC deal on record.
Roughly 400 SPACs are looking for deals, said Zimmerman-Sorio, according to the Bloomberg report. SPAC merger sizes are increasing as well, with the average size of an announced merger at $2.3 billion compared with $900 million in the first quarter of 2020 and $800 million in the first quarter of 2019.
Some now-familiar corporate names have gone public via SPACs, including commercial space-exploration developer Virgin Galactic and sports betting company DraftKings. SPACs have attracted a range of high-profile investors such as hedge fund manager Bill Ackman and billionaire Chamath Palihapitiya, ex-baseball player Alex Rodriguez and ex-House Speaker Paul Ryan.
This week, the Securities and Exchange Commission said it's "taking a hard look"at the recent surge in SPACs and warned investors of the risks involved with celebrity-backed blank-check companies.