Activity among special purpose acquisition companies has continued so far this year at its breakneck pace of 2020. With January more than half over, announced listings for SPACs have already surpassed the combined total for the first five months of last year.
At this pace, January will match or possibly exceed the record-setting month of last September, when announced listings peaked before a slowdown ahead of the election. That slowdown, though, did not last, and SPAC activity roared back in December and has carried over into the new year.
But the flood of cash also prompts a new wrinkle in the SPAC boom: Where will these blank-check companies invest their money? SPACs, after all, are typically required to put their cash to work within two years.
Where will all these SPACs invest their money?
Should new SPAC listings continue at current levels, competition for target companies meeting the right profile should heat up and swing the economics in favor of companies to be acquired and away from the SPAC sponsors and SPAC investors.
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