Spec with Acceleration... Recruitment Amount Surpasses Last Year's Total

Spec Merger Scale Increases 20 Times Compared to Last Year

[Asia Economy Reporter Yujin Cho] The scale of capital raised through SPACs (Special Purpose Acquisition Companies) has surpassed last year's total amount in just over three months this year.

US CNN reported on the 17th (local time), citing Dealogic, that the total value of SPAC mergers in the US stock market this year reached $83.1 billion (as of the 16th), exceeding last year's total of $82.6 billion. This represents a 2031% increase (about 20 times) compared to the same period last year.

SPACs raise funds through public offerings and get listed on the stock market, then merge with unlisted companies within a set period (2 years). For unlisted companies, listing through a SPAC offers the advantage of reducing the listing procedures compared to a traditional initial public offering (IPO).

Last year, due to increased volatility caused by the COVID-19 pandemic, the number of companies seeking rapid capital raising increased, fueling a SPAC listing boom. In the US stock market last year, the number of listings through SPACs reached 248, four times the previous year.

CNN warned that the capital hunt through SPACs could monopolize funds from companies waiting for a normal IPO.

Rick Rieder, Chief Investment Officer (CIO) of BlackRock, stated, "Some SPACs are being listed at valuations 40 to 50 times their earnings," warning that these valuations are inflated beyond their actual worth.

CIO Rieder urged investors to be cautious about the SPAC bubble, saying, "Before jumping on a train running wildly, you need to know where this train is headed."

SPACs have traditionally been a channel for non-prime companies that cannot enter the stock market through conventional IPOs, but in the past 1-2 years, several successful cases such as Virgin Galactic and DraftKings have drawn market attention.

CNN reported that the participation of famous celebrities such as former Major League Baseball (MLB) player Alex Rodriguez and hip-hop star Jay-Z is also fueling the SPAC boom. The involvement of global billionaires, financiers, and famous celebrities has created buzz, further igniting the SPAC craze.

The US Securities and Exchange Commission (SEC) also issued a warning about the SPAC investment boom led by celebrities. On the 10th, the SEC stated on its website that "deciding to invest in a SPAC just because a celebrity is involved is not appropriate," and warned that "celebrities can also be misled into risky investments."

The SEC also cautioned against rash SPAC investments based solely on information received through social media, investment newsletters, online advertisements, emails, investment research websites, internet chat sites, direct messages, newspapers, magazines, TV, or other sources.

The SEC noted that SPAC investments can be riskier than normal IPO investments because investors themselves need to directly examine the financial status and potential risks of the companies involved.

This content was produced with the assistance of AI translation services.