By focusing on private tech investing, your executive (“Spacs are down but shouldn’t be out,” FT View, Jan. 28) dramatically misrepresents the range and sustainability of the special-purpose acquisition company market , particularly in the UK and continental Europe.
While it is true that with 13 deals in Europe in 2021, technology assets delivered the highest volume of de-Spacs (those deals where a Spac merges with its target business). In terms of value, Industrials led the way with deals worth $27.74 billion, followed by Technology ($13.46 billion), while Materials achieved a deal value of $27.74 billion. $11.46 billion from just two deals (White & Case).
More importantly, the comment that “a market correction . . . salutary reminder of the risks inherent in investing [in Spacs] and the importance of due diligence” makes me wonder if there is a failure to understand the mechanics of de-Spacs as it seems to insinuate that investors will approve a structure without having enough information about the target company.
Admittedly, for EU Spacs, detailed information must be provided during the EGM. In addition, Private Public Equity Investment (PIPE) investors who step in once the target has been identified and when more cash is needed, are professional institutions that will only invest in the business combination with background information. satisfactory due diligence.
While it’s true that inflation and higher interest rates may mean investors are less eager to invest and will therefore become more selective, I think much of the negativity in the article stems from the fact that some US Spacs were lifted by less credible teams, which is now corrected by the market. This issue does not apply to the EU Spac market as regulators are already focusing on experienced traders.