SPACs In 2021 – The New Model For Private Equity?

As 2021 reaches its halfway point, we continue to find ourselves in the midst of a special purpose acquisition company (SPAC) frenzy.

Already by May this year, there were more than 300 listed SPACs generating gross proceeds of more than US$100 billion. To put this into perspective, that figure has already surpassed the total proceeds from SPACs in 2020 (in excess of 200 were listed, generating gross proceeds in the region of US$80 billion).

As SPACs enjoy another record year, a number of venture capital (VC) and private equity (PE) firms have shown increasing interest in incorporating SPACs into their investment and structuring toolkits. In many respects, the aims of SPACs and customary VC / PE strategies are very similar and firms are now seeing that SPACs themselves might offer multiple advantages over the traditional acquisition and investment holding structures utilised by PE.