SPAC has been struggling to find mergers... so it's returning raised money to investors.
👉Background: SPAC stands for Special Purpose Acquisition Company. Put simply, SPACs are shell companies set up by investors to raise money. The aim is to acquire or merge with a company looking to go public.
👉 What happened: In 2020, SPAC’s were trending harder than Joe Exotic. In fact, SPACs raised $83 billion USD that year. And SPACs raised more than $160 billion USD in 2021.
👉 What else: Now, one of the SPAC leaders, Chamath Palihapitiya has announced he’s shutting down 2 of his SPACs, worth $1.6 billion USD. He couldn’t find merger partners by their two-year deadline so the money raised will be returned to investors.
💡A rising tide floats all boats. Back in 2021, the SPAC boats were floating at the top!
💡We saw Buzzfeed merge with a SPAC, WeWork merged with a SPAC and even Virgin Galactic merged with a SPAC. But post-merger, two-thirds of SPACs are reporting a loss in value.
💡The post-merger performance of SPACs makes it hard to convince prospective public companies to merge with a SPAC. But there are still around 600 SPACs that need to find a partner in crime so watch this SPAC... I mean space.
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