SPAC Bubble

A SPAC is a blank-cheque company with no operations that raises cash through an IPO and then typically has about two years to merge with a private operating company, taking that target public through a de-SPAC transaction rather than a traditional IPO. In 2020 and 2021, this structure shifted from a niche product to a dominant feature of the U.S. new-issue market. SPACs were 55.7% of all U.S. IPOs in 2020 and 68.5% in the first quarter of 2021. By the end of 2021, the U.S. had seen 613 SPAC IPOs, up from 248 in 2020, and 2022 would collapse to 86 and about US$13 billion of proceeds.