SPAC Losing Investment Momentum... 102 Trillion Won Liquidation (Comprehensive)

Maturity Due SPAC Investment Repayment
Additional Liquidation of 49 Trillion Won Scheduled for March Next Year

[Asia Economy Reporter Yujin Cho] As more SPACs (Special Purpose Acquisition Companies) are liquidating due to a lack of suitable investment targets, approximately $75 billion (about 102.225 trillion KRW) is expected to be returned to investors over the next six months.

On the 4th (local time), major foreign media outlets cited SPAC Research data reporting that around $75 billion worth of SPACs are scheduled to mature and liquidate between this month and February next year, with an additional $36 billion worth of SPACs expected to liquidate in March next year.

Market experts predict that since few new SPACs are being established, this capital will likely flow back into the stock market.

A SPAC is a shell company that raises funds through public offerings and lists on the stock market, existing to merge with an unlisted company within a set period (two years). If a target company is not found within the SPAC’s two-year validity period, the SPAC returns the raised funds to investors and proceeds with liquidation.

Foreign media analyzed that the surge in SPAC liquidations will provide liquidity opportunities for investors who have suffered investment losses amid the market downturn this year.

During the COVID-19 pandemic, SPACs overheated as funds with no other destinations poured in due to monetary easing. The market volatility caused by COVID-19 increased the number of companies seeking rapid listings, fueling a frenzy of initial public offerings (IPOs) via SPACs.

Alongside meme stocks and Bitcoin, SPAC investments saw a record surge, attracting massive capital inflows of over $250 billion (about 340.75 trillion KRW) from early 2020 over two to three years.

However, with the stock market slump stalling company listings and low-quality or marginal companies exploiting SPACs as a backdoor, regulatory moves have been initiated by the U.S. Securities and Exchange Commission (SEC) and other authorities worldwide, causing SPAC investment enthusiasm to cool rapidly.

As a result, hedge funds that led SPAC formations saw their SPAC investment performance decline by 6.8% in the second quarter of this year.

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