How Spacs are luring investors despite waning market interest
Some approaches used by Spacs include offering bonus stock to investors who choose not to redeem shares Special purpose acquisition companies (Spacs) are turning to costly new tactics to keep investors from jumping ship as market confidence wanes in the once red-hot alternative to IPOs. Blank-cheque acquisition firms and the companies they acquire are having to hand over bigger stakes in the ventures to investors in some cases, often at big discounts. Deal managers are also seeking backstop financing from investment companies and ploughing in more of their own cash. Less than three months into 2022, 13 mergers involving Spacs have already fallen through in the US, according to data from industry tracker Spac Research. That compares with a total of 18 in the whole of 2021. In money terms, almost $9.5 billion worth of mergers have been canned this year, according to Dealogic data. The main cause of deals being abandoned, market players say, is the risk of redemptions — where i...