With four months remaining in 2020, a record has been set. As of late last week, 88 companies had already gone public via SPAC initial public offerings, and 32 more have announced intentions to do so by the end of the year. Should they all close, that represents a near-doubling of SPAC IPOs year over year.
Part of the surge can be attributed to pandemic-related disruptions of financial-industry norms, says Kristi Marvin, founder of SPACinsider.com and a longtime investment banker. But that's not the sole factor.
"You take the fact that a traditional IPO is inherently risky, and even more so during the uncertainty of a pandemic, and it's an election year, and then you layer in the fact many of these companies are mature and hadn't had to go public because private equity had been more readily available," she said. "So you have companies that need an equity infusion questioning the traditional route or examining their operations."
Collectively, that infusion has been substantial.
Through early Friday, Sept. 4, the 88 companies that had gone public via SPACs had reaped gross proceeds of about $34 billion. Health care and biotech companies have constituted a significant portion of the mushrooming SPAC interest this year. But there's no subsector garnering more attention than auto-tech companies.