Despite continued market volatility, SPAC transactions remain a viable pathway to the public markets
More SPAC Sponsors extended versus liquidated in Q1 based on increased optimism for compelling deals
The pace of SPAC IPOs increased marginally in Q1 from the second half of 2022 as recent activity around extensions, deal announcements and liquidations reduced the SPAC maturity wall “overhang.” This set conditions for an increased number of efficiently-sized SPAC IPOs. For example, Q1 2023 saw 11 completed SPAC IPOs and an average SPAC IPO size of $82 million, up from 8 IPOs per quarter in H2 2022 with an average IPO size of $87 million. Furthermore, three serial SPAC sponsors returned in Q1, showing confidence in the deal-making environment.
“SPAC transactions remain a viable pathway to the US public markets,” said Don Duffy, President of ICR. “We expect redemption rates, which remain elevated, to lag the material improvement in targets’ valuation and EBITDA profiles. The currently high correlation among redemptions obscures the long-term value created by building institutional relationships during the transaction process. The SPAC transaction doesn’t end with the shareholder vote. In order to unlock value for all stakeholders, SPACs require an advisor with experience across capital markets, investor relations, and public relations.”
“SPACs are pushing out timelines in order to get deals done, with more than twice as many SPACs electing to extend vs. liquidate in Q1. This demonstrates conviction in their ability to close compelling deals,” said Niren Nazareth, Managing Director, ICR Capital. “We actively advise clients on structuring and sequencing to optimize their SPAC financing package, including credit and equity PIPEs for mature businesses. The SPAC market changes fast – ICR can provide unparalleled insight given our leading market share in SPAC transaction advisory.”
“New issue activity picked up in Q1 2023 as pent-up supply hit an open market window,” said Michael Goldberg, Managing Director at ICR Capital. “The follow-on, block trade, and convertible debt supply came from financial sponsor monetization and corporations raising primary capital. Wall-crossed transactions dominated the new issue calendar as issuers attempted to mitigate market volatility. Looking ahead, IPO and SPAC IPO activity is expected to pick up later in 2023, following more visibility on corporate profitability, inflation, and interest rates. Fortunately, there is a large backlog of companies ready to come to market once conditions improve.”
ICR is the largest advisor and communications consultant to SPACs, having worked on over 150 transactions since 2021. To obtain a copy of ICR’s April 2023 SPAC Market Update & Outlook report, please click here.
Established in 1998, ICR partners with its clients to execute strategic communications and advisory programs that achieve business goals, build awareness and credibility, and enhance long-term enterprise value. The firm’s highly-differentiated service model, which pairs capital markets veterans with senior communications professionals, brings deep sector knowledge and relationships to approximately 1,000 clients across more than 20 industry groups. ICR’s healthcare practice operates under the Westwicke brand (www.westwicke.com). Today, ICR is one of the largest and most experienced independent communications and advisory firms in North America, maintaining offices in New York, Norwalk, Boston, Baltimore and Beijing. Learn more at www.icrinc.com. Follow us on Twitter at @ICRPR.
Brian Ruby, ICR, 203-682-8268, Brian.Ruby@icrinc.com