SPAC Euphoria Turns Into Painful Reckoning as Liquidity Runs Dry
- Sponsors with $74 billion have deadlines in the coming months
- Industry veterans predict smaller, dedicated pool of backers
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One of the hottest pandemic-era trends in investing is receding back into obscurity after more than a billion dollars in losses for backers of special-purpose acquisition companies.
In the first four months of 2023 alone, sponsors of SPACs with some $74 billion in cash will need to find targets to buy or move to dissolve their funds, according to data compiled by Bloomberg. Assuming the shopping spree comes up empty, this will likely mark the end of a frenzy that saw more than 800 of the funds raise almost a quarter-trillion dollars in 2020 and 2021. The euphoria has worn off, with hundreds of sponsorship teams expected to throw in the towel through early next year.