Private equity firms have emerged as some of the biggest sponsors of special purpose acquisition companies, which have mushroomed since 2020 after a lull in activity in the years following the global financial crisis.

Thanks to the ongoing surge in public equity markets, as well as a waning appetite for traditional IPOs, the SPAC momentum has carried over into 2021, with the number of global private equity-backed SPAC IPOs through Aug. 23 nearly double the total for full year 2020.

Of the 493 SPAC IPOs recorded so far in 2021, 80 are backed by private equity/venture capital firms with an ownership interest of at least 5%, according to S&P Global Market Intelligence data. In the entire 2020, there were 44 such IPOs out of 304 total SPAC offerings.

The proportion of private equity-backed SPAC IPOs relative to overall SPAC activity in each of the last three years has also been increasing.

Lion's share

The U.S. has continued to dominate the global SPAC scene in 2021, despite a recent decline in investor interest amid a regulatory crackdown over disclosures, investor lawsuits and cases of weak financial performance.

Prominent private equity firms such as Blackstone Inc., Apollo Global Management Inc., KKR & Co. Inc., Fortress Investment Group LLC, TPG Capital LP and Warburg Pincus LLC have been behind some of the most notable SPACs launched in the last two years.

However, two of the top five private equity-backed SPACs in terms of market capitalization count Las Vegas-based Trasimene Capital Management LLC, which was founded only two years ago, as their biggest stakeholder. The two are Austerlitz Acquisition Corp. II and Austerlitz Acquisition Corp. I, which have respective market caps of $1.91 billion and $974.9 million and mainly focus on financial technology businesses.

KKR-backed SPAC KKR Acquisition Holdings I Corp., which mainly targets businesses in the consumer or retail markets, is second on the list with a market cap of approximately $1.68 billion.

Apollo-backed SPACs Apollo Strategic Growth Capital and Apollo Strategic Growth Capital II also feature in the top five, with market caps of $993.4 million and $836.6 million, respectively.

Apollo is also said to be seeking $500 million for an investment vehicle to back SPACs, according to a recent report by Reuters. The strategy will reportedly be unique in that it will look to acquire interests in IPOs and private placement of blank-check companies and also offer liquidity to SPAC managers by purchasing their founder shares.

In other regions, Asia-Pacific has been warming to SPACs. South Korea remains a preferred listing location for most regional blank-check companies, but the exchanges in the country are said to be less likely to attract international SPACs due to a lack of support for overseas IPO applicants and investors.

In a bid to tap investor demand for SPACs in Asia, the Singaporean bourse recently allowed the vehicles to list on its mainboard provided they have a minimum market capitalization of S$150 million and acquire a target company within two years of the IPO.

Hong Kong is also open to loosening its financial requirements to make it possible for SPACs to list.