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ARTICLE · 24 MAY 2021

A Jekyll And Hyde Year For SPACs - 2021

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SPACs were the darling of Q1 2021 with 298 SPACs raising a total of USD88 billion, exceeding the USD76 billion raised in the whole of 2020 and representing a 2,200% increase year on year...

GlobalCorporate/Commercial Law
David Bulley
David Bulley
Dean Bennett
Dean Bennett
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SPACs were the darling of Q1 2021 with 298 SPACs raising a total of USD88 billion, exceeding the USD76 billion raised in the whole of 2020 and representing a 2,200% increase year on year versus Q1 2020.  In comparison, since 1 April 2021 only 20 SPACs have priced with commentators now questioning the market for SPACs. In this article we offer our views on why this has happened and look ahead to the future for SPACs and what may happen next.

Many commentators point to the SEC staff statement on accounting and reporting considerations for warrants issued by SPACs which was originally announced on 12 April, 2021 as the main cause for the marked slowdown in new SPAC IPOs.  In short, this provided that because SPAC warrant instruments have traditionally included provisions that provide for potential changes to settlement amounts depending on the holder, such provisions would preclude such warrants from being classified as equity and instead should be accounted for as

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