The number of IPOs by private equity-backed special purpose acquisition companies in the U.S. declined significantly year over year in the first quarter as the wider market for SPAC IPOs also collapsed.
Private equity-backed SPAC IPOs numbered just three in the U.S. for the first quarter compared to 42 for the same period a year ago, a nearly 93% decline, according to S&P Global Market Intelligence data. Private equity-backed SPACs are those with at least 5% of voting shares controlled by a private equity or venture capital firm.
The total number of IPOs by SPACs on U.S. public exchanges fell to just 53 in the first quarter from 227 for the same period in 2021, a record year for SPACs. That represents a decline of nearly 77%.
SPACs are publicly listed corporations that have no commercial operations and are formed to raise capital for an IPO, after which the SPAC acquires or merges with an existing company. Investors' waning enthusiasm for SPACs coincides with stricter regulations the Securities and Exchange Commission proposed in March, evidence that SPACs often fail to live up to overly optimistic revenue projections and a decline in traditional IPOs.
SPACs come with an expiration date and typically must dissolve if they do not make a deal within two years.
The Nasdaq-listed Vickers Vantage Corp. I is closer to its expiration date than any SPAC backed by U.S. private equity, according to Market Intelligence data. Vickers has a definitive agreement to be acquired by Scilex Holding Co., a Silicon Valley company that produces a nonopioid pain management drug, and the deal has until June 15 to close before its expiration date. The SPAC had a market capitalization of about $175.8 million as of May 19, up about 1.9% in the roughly 16 months since its January 2021 IPO.
Among those U.S. private equity-backed SPACs still seeking a partner for a merger or acquisition, Oca Acquisition Corp. was nearest its expiration date. Oca has until July 20 to make a deal. Pegged at about $187.3 million in mid-May, its market cap has barely budged since its January 2021 IPO on Nasdaq.
The largest U.S. private equity-backed SPAC slated to expire before the end of 2022 was Apollo Strategic Growth Capital, which had a market cap of just over $1 billion as of May 19. On May 25, however, the SPAC's shareholders approved a merger deal with American Express Global Business Travel, and the company is now trading on the NYSE as Global Business Travel Group Inc.
