SPACs (Special Purpose Acquisition Companies) are increasingly looking outside the US in search of target companies as they strive to meet upcoming deadlines in the backdrop of a dearth of traditional initial public offerings. Statistics compiled by Bloomberg show that at least 10 international deals involving SPACs since the end of February form nearly half of the total number of blank check mergers over the same period.
This shift in strategy emerges as nearly 300 SPACs are more time-sensitive in their hunt for suitable mergers and acquisitions as deadlines loom in the upcoming six months. Moreover, many sponsors have opted to give up their hunt and refund investors. Adding to the gloomy outlook, the equity capital markets have had the worst start to a numeric year in more than 10 years.
One of the more recent deals include Northern Revival Acquisition Corp who agreed to take Australia-based Braiin Ltd., an analytics and agricultural technology services company, public in March. HCM Acquisition Corp also intends to take Mexico-based property developer Murano PV public, diverting away their focus from a financial firm. Other non-US based mergers include Sao Paulo’s Lavoro and that of Israel-based HUB Cyber Security.
It is a wary reflection of the state of the US market that the bulk of the viable targets for SPACs reside outside the US, according to Perrie Weiner, chair of Baker & McKenzie’s North America securities litigation group. Cohen & Company Capital Markets co-founder and head of investment Banking Dan Nash too conveys how SPACs could be used for a variety of creative approaches to access the markets even in a difficult market environment.
Statistics provided by Bloomberg show that since the start of the year, nine of the twenty-eight companies that have gone public through SPAC mergers hail from beyond the US. Unfortunately, the non-US firms have suffered losses of over fifty percent versus a median drop of forty-five percent for those based in the US and have failed to match the S&P 500 index which has risen by 7.6 percent.
Company Mentioned: Northern Revival Acquisition Corp. is a special purpose acquisition company based in the US that has agreed to take Australian-based Braiin Ltd., an agriculture technology and analytic services company, public last month.
Person Mentioned: Perrie Weiner is the chair of North America securities litigation group for Baker & McKenzie and Dan Nash is the co-founder and head of Investment Banking for Cohen & Company Capital Markets.