Investors thought that 2020 was the year of the SPAC… but 2021 is set to blow it out of the water.
SPACs are one of the hottest trends on Wall Street at the moment.
According to data from Refinitiv, global deal volumes have already surged to a record $170 billion this year - outstripping last year’s total of $157 billion.
In the U.S. alone, 235 SPAC vehicles raised about $72 billion this past year, while there have already been 244 SPACs that raised a staggering $78 billion so far in 2021.
The sheer deal volume alone has been eye-opening.
But what exactly are SPACs and why are they the hot new trend to watch right now?
SPAC popularity is growing
A SPAC, an acronym for Special Purpose Acquisition Company, is basically a publicly traded shell company that has no operations or assets aside from the cash that’s raised through an initial public offering (IPO).
However, their sole purpose is to utilize the funds raised from investors to acquire an existing, privately held company — thus making it public without going through the traditional initial public offering process.
Because the funds are raised BEFORE the sponsors look for an acquisition target, the investment is essentially a bet on the management team’s (or sponsors’) reputation that they will be able to complete a successful business combination.
There are no guarantees as to how the money will be spent or even if the money will be used.
But here’s the thing.
Although these “blank check” companies have been around for decades, they were generally regarded as poor investments in the past.
Blind pools in the 1980s and 1990s often lacked stated investment goals for the money raised. There were also very few restrictions on what and how the fund could invest, and furthermore, there were usually very few restrictions or safeguards in place for investor security.
With the freedom to do what they wanted, sponsors were incentivized to get a deal done at any cost and they would often pay too much to acquire a company, which then led to poor returns for investors.
Sometimes these pools were created and later dissolved without making a single investment—though the managers or general partners still made off with hefty fees.
Thankfully, times have changed.
Greater Investor Protections
The SEC has since tightened regulations and procedures for these ventures, and today, while investors still don’t know exactly what the SPAC will acquire, the funds are now held in a trust account and can’t be spent until certain conditions are met.
According to the SEC:
“Once the SPAC has identified an initial business combination opportunity, the shareholders of the SPAC will have the opportunity to redeem their shares and, in many cases, vote on the initial business combination transaction.
Each SPAC shareholder can either remain a shareholder of the company after the initial business combination or redeem and receive its pro rata amount of the funds held in the trust account.
This is an important investor consideration as the SPAC changes from essentially a trust account into an operating company.
As an investor, depending on how you view the prospective initial business combination and its valuation, you can decide whether to redeem your shares for a pro rata share of the aggregate amount then on deposit in the trust account or remain an investor in the combined company going forward.”
With these fairly new investor protections in place, SPACs have yet again become attractive opportunities worth a second look.
So without further ado, let’s start our list of the 10 Best SPAC Stocks investors are buying right now:
Ajax I Units (NYSE:AJAX.U)
Reinvent Technology Partners Units (NYSE:RTP.U)
RedBall Acquisition Corp (NYSE:RBAC)
Vesper Healthcare Acquisition Corp (NASDAQ:VSPR)
Avanti Acquisition Corp. Units (NYSE:AVAN.U)
Ajax I is a blank check company led by Daniel Och - who founded private investment firm Willoughby Capital Holdings in 2009.
Ajax has assembled a strong group of strategic board advisors, all of whom are founders and operators of generation-defining companies in our target sectors. The board is comprised of Kevin Systrom (Instagram Co-Founder and former CEO), Anne Wojcicki (23andme Co-Founder and CEO), Jim McKelvey (Square Co-Founder), and Steve Ells (Chipotle Founder and former CEO).
Reid Hoffman, Mark Pincus, and Michael Thompson are the people behind Reinvent Technology Partners.
Mr. Hoffman and Mr. Pincus collaborated during the early stages of social media development. They partnered to purchase the “Six Degrees patent,” a patent fundamental to the development of the social networking industry, in order to ensure that no one firm impeded innovation.
They started two of the earliest social networks, led the seed round in Friendster, and were among the first investors in Facebook. Mr. Hoffman pioneered the professional network with LinkedIn, and he previously co-founded and served on the management team of PayPal, one of the earliest online payments providers to achieve scale, enabling the burgeoning ecommerce industry. Mr. Pincus pioneered the social gaming industry with Zynga.
Today, Mr. Hoffman is an expert in social networks, online marketplaces, emerging technologies, like artificial intelligence and autonomous driving, and reinventing industries. Mr. Pincus is an expert in building and growing consumer products through data-driven product management and live operations.
Redball Acquisition Corp is a new blank check company that intends to focus on businesses in the sports, media and data analytics sectors, with a focus on professional sports franchises, which complement our management team’s expertise and will benefit from our strategic and hands-on operational leadership.
The management team is led by Gerald Cardinale (Co-Chairman), Billy Beane (Co-Chairman), Alec Scheiner (Chief Executive Officer) and Luke Bornn, PhD (Executive Vice President).
Mr. Cardinale, the Founder and Managing Partner of RedBird, is a leader in the sports industry, with over 25 years of experience building a range of multi-billion-dollar platform companies.
Mr. Beane - who was played by Brad Pitt in the 2011 film Moneyball - is considered one of the most progressive and iconic executives in professional sports and has been a leader in bringing analytics to the forefront of professional sports. He was promoted to his current position of Executive Vice President of Baseball Operations for the Oakland A’s in 2015 after 18 seasons as General Manager.
Mr. Scheiner is a well-respected operator and investor within the sports and media industry.
Dr. Bornn is recognized as a world leader in sports analytics, having published dozens of peer-reviewed academic articles across multiple sports. His work has received numerous accolades, including six straight MIT Sloan research award finalist selections from 2014 through 2019.
Vesper Healthcare Acquisition Corp is a blank check company that intends to focus on the pharmaceuticals and healthcare sectors with an emphasis on companies in the medical aesthetics, eye care, longevity and wellness categories.
The company is led by Brent Saunders who is the Chief Executive Officer & Chairman of the Board of Directors and also Dr. Manisha Narasimhan who is the Chief Financial Officer.
Mr. Saunders has over 25 years of experience in various aspects of healthcare and has been in leadership roles at several prominent global pharmaceutical and healthcare companies. Until May 2020, when it was acquired by AbbVie Inc. in a transaction valued at approximately $63 billion, Mr. Saunders served as Chairman, President and Chief Executive Officer of Allergan plc.
Dr. Manisha Narasimhan has over fifteen years of experience working with leading pharmaceutical and biotechnology companies and brings extensive scientific and capital markets expertise to our company. Dr. Narasimhan joined Allergan in December 2018 and most recently served as Senior Vice President of Strategic Initiatives, Portfolio Innovation and Investor Relations, where she was ranked #1 by Institutional Investor for Best Investor Relations Professional, Best IR Team, and Best IR Program in the pharmaceuticals sector.
Avanti Acquisition Corp. is a newly formed blank check company that is founded by NNS Group, a single-family office founded by Mr. Nassef Sawiris, and Sienna Capital, the wholly-owned alternative investment platform of Groupe Bruxelles Lambert, a publicly traded investment holding company.
Mr. Sawiris, the chairman and chief executive officer, and Mr. Colin Hall, vice-chairman of the board of directors of Sienna Capital and one of the directors, have focused their careers on investing across a variety of areas and have a track record of identifying high-quality assets, businesses and management teams with significant resources and optimization potential.
In the public markets, NNS Group or NNS UK Group are most notably:
NNS Group has also invested in excess of approximately $2 billion over the past two years across more than ten companies in the technology, software and media space in the United States, Europe and China.
In the private markets, some of NNS Group’s or NNS UK Group’s significant investments include:
In July 2018, Sienna Capital invested €250 million alongside KKR in Upfield Europe B.V., valuing the company at an enterprise value of approximately €6.8 billion. The transaction was the first direct investment transaction of Sienna Capital. Sienna Capital is represented on the board of Upfield. Upfield is a global leader in plant-based nutrition with more than 100 brands, operating in 69 markets around the globe, and holding the number one brand position in 49 countries, in each as of December 31, 2019. Upfield is headquartered in Europe and has six business units, which cover Northwest Europe, Southwest Europe, Central/Eastern Europe, North America, Middle/ Latin America and Asia/Africa.
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