Gensler puts PSPC market on notice + big buybacks to come

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SEC Chairman Gary Gensler stepped out this week and spoke very loudly about his belief on three things. First, that the SPACs do not offer the necessary protections to investors. Second, the field needs to be leveled between PSPCs and IPOs. And, third, the SEC will act.

The rumbles started earlier this year, but the biggest action to date has been a demand to change the way warrants are valued on their books. This slowed the market down in the second quarter, but in the third and fourth quarters it started to rise again with 15 IPOs in just the past two days. The accounting changes were, in fact, nothing more than a nuisance, but from our perspective, the fact that they slowed down the market was a bit of a silver lining.

Source: SPAC Intelligence service of Boardroom Alpha

The majority of the market will likely agree with Gensler that there are too many SPACs in the market right now and the incentives are not always aligned. This is especially true given that many will come due at the same time as the 2021Q1 vintage ages beyond 12 months as 2022Q1 progresses. We have been warning for a while that “Peak Deal” – when all of these SAVS are forced to make a deal – will likely result in a number of bad deals that will inevitably be bad for the market. This remains one of the biggest risks for after-sales services in 2022.

Gensler also cited the supposed advantage that PIPE investors have over the general public when investing in SPACs. From our accounts, investors in PIPE, alongside outside investors, are often heavily penalized when deSPACs go wrong. If Gensler and the SEC are serious about digging into the advantaged parties, then they should look at the sponsorship dynamic, as they are almost always the winners of a PSPC deal, no matter how other stakeholders do it. This is where there might be a place for better alignment and protections for traditional investors.

PSPC Agreement Announcements

On Friday there were two early morning chord announcements.

Elsewhere in PSPCs

Apart from a few large isolated players, the PSPC market has been generally calm on a smoother and more positive day in the market. The ex-buyout exerted downward pressure on the SAVS which will vote on Monday and Tuesday of next week (as is generally the case). Watch out for buyouts and low float opportunities next week, as everyone votes below $ 10 even before the ex-buyout.

the FST / Fertitta Entertainment the agreement was formally terminated. It was a tough end to the deal that will leave some wary of players in the future.

IPO SPAC

As noted above, the IPOs of SPAC erupted on Thursday and Friday. There are too many of them and if this pace continues it will not end well for PSPC market participants. And, if that tips things too much, the SEC will likely have to play a stronger hand, which would likely be bad for the overall market as well. Here’s a look at where they ended the week (remember most have overfunded trusts so ideally they would be well over $ 10).

$ 9.91 | TCOA – Trajectory Alpha Acquisition Corp.
$ 10.00 | PORT – Southport Acquisition Corporation
$ 10.06 | XPDB – Power Digital Infrastructure Acquisition II Corp.
$ 10.18 | FXCO – Financial Strategies Acquisition Corp.
$ 9.98 | ATEK – Athena Technology Acquisition Corp. II
$ 10.01 | HAIA – Healthcare AI Acquisition Corp.
$ 10.00 | GFGD – Growth for Good Acquisition Corp
$ 9.99 | FRBN – Forbion European Acquisition Corp.
$ 9.96 | TGAA – Target Global Acquisition I Corp.
$ 10.05 | GGAA – Genesis Growth Tech Acquisition Corp.
$ 10.03 | WEL – Integrated Wellness Acquisition Company
$ 10.05 | HORI – Emerging Markets Horizon Corp.
$ 10.00 | RJAC – Jackson Acquisition Co
$ 10.03 | IGTA – Inception Growth Acquisition Ltd
$ 10.07 | DAOO – Crypto 1 Acquisition Corp

PHAC Calendar

We are approaching the final votes on the 2022 agreements and hopefully an increased pace of agreements and deSPAC in Q1 / Q2. Next week will see a number of votes with all PSPCs trading under $ 10. Watch for a week of big buyouts.

December 13 | $ 9.43 | YAC – Yucaipa Acquisition Corporation -> SIGNA Sports United
December 14th | $ 9.57 | BSN – Broadstone Acquisition Corp. -> Vertical aerospace
December 14th | $ 9.80 | ISOS – Isos Acquisition Corp. -> Bowlero
Dec 16 | $ 9.97 | CMLT – CM Life Sciences III Inc. -> EQRx, Inc.
December 20 | $ 9.88 | CFV – CF Acquisition Corp. V -> Satellogic
December 21 | $ 9.97 | MACQ – MCAP Acquisition Corporation -> AdTheorent Inc.
December 21 | $ 9.97 | HCAQ – HealthCor Catalio Acquisition Corp. -> Hyperfine, Inc.
December 22 | $ 10.17 | SEAH – Sports Entertainment Acquisition Corp -> Super Groupe
December 23 | $ 10.82 | FSII – FS Development Corp. II -> Pardes Biosciences, Inc
December 23 | $ 10.15 | DBDR – Roman DBDR Tech Acquisition Corp. -> CompoSecure Holdings, LLC
Dec 28 | $ 9.96 | ATNH – Athena Technology Acquisition Corp. -> Heliogen
Dec 28 | $ 9.99 | NGCA – NextGen Acquisition Corp. II -> Virgin Orbit

Today’s SPAC movers

The biggest winners8.53% ~ $ 14.00 | ESSC – East Stone Acquisition Corporation (Announced)
1.95% ~ $ 9.95 | SHQA – Shelter Acquisition Corporation I (Pre-Deal)
1.54% ~ $ 9.90 | FHLT – Future Health ESG Corp. (Pre-Deal)
1.13% ~ $ 10.73 | SNII – Supernova Partners Acquisition Company II, Ltd. (Announcement)
0.99% ~ $ 10.16 | FST – FAST ACQ CP (Pre-Deal)
0.93% ~ $ 9.77 | ALPA – ALPHA HEALTHCARE ACQUISITION CORP III (Pre-Deal)
0.71% ~ $ 9.95 | CRHC – Cohn Robbins Holdings Corp. (Before the transaction)
0.62% ~ $ 9.71 | ORIA – Orion Biotech Opportunities Corp. (Pre-Deal)
0.62% ~ $ 9.80 | AGAC – African Gold Acquisition Corporation (Pre-Deal)
0.62% ~ $ 9.81 | LHAA – Lerer Hippeau Acquisition Corp (Pre-Deal)
0.51% ~ $ 9.82 | PANA – Panacea Acquisition Corp. II (Pre-Deal)
0.50% ~ $ 9.99 | ENVI – Environmental Impact Acquisition Corp. (Announcement)
0.41% ~ $ 9.80 | STRE – Supernova Partners Acquisition Company III, Ltd (Pre-Deal)
.40% ~ $ 10.00 | GPCO – Golden Path Acquisition Corporation (Announced)
0.31% ~ $ 9.71 | GXII – GX Acquisition Corp. II (Before the transaction)
0.31% ~ $ 9.75 | KSI – Kadem Sustainable Impact Corporation (Pre-Deal)
0.31% ~ $ 9.78 | RMGC – RMG Acquisition Corp. III (Before the transaction)
0.31% ~ $ 9.83 | ADRA – Adara Acquisition Corp. (Pre-agreement)
0.31% ~ $ 9.84 | LDHA – LDH Growth Corp I (Pre-Deal)
0.30% ~ $ 9.87 | GAPA – G&P Acquisition Corp. (Pre-Deal)

The biggest losers
-10.50% ~ $ 10.82 | FSII – FS Development Corp. II (Announced)
-4.65% ~ $ 9.43 | YAC – Yucaipa Acquisition Corporation (Announced)
-4.04% ~ $ 9.75 | CPAA – Conyers Park III Acquisition Corp. (Before the transaction)
-3.45% ~ $ 12.03 | MEKA – MELI Kaszek Pioneer Corp (Pre-Deal)
-2.29% ~ $ 9.80 | PEPL – PepperLime Health Acquisition Corp (Pre-Agreement)
-2.07% ~ $ 9.93 | DTRT – DTRT Health Acquisition Corp. (Pre-agreement)
-1.99% ~ $ 11.30 | XPDI – Power & Digital Infrastructure Acquisition Corp. (Announcement)
-1.85% ~ $ 9.57 | BSN – Broadstone Acquisition Corp. (Announcement)
-1.72% ~ $ 9.72 | IPVI – InterPrivate IV InfraTech Partners Inc. (Pre-Deal)
-1.32% ~ $ 9.73 | PFTA – Portage Fintech Acquisition Corp. (Pre-agreement)
-1.26% ~ $ 10.22 | BRPM – B. Riley Principal 150 Merger Corp. (Announcement)
-1.22% ~ $ 9.70 | GOBI – Gobi Acquisition Corp. (Pre-agreement)
-1.22% ~ $ 9.75 | FTEV – FinTech Evolution Acquisition Group (Pre-Deal)
-1.21% ~ $ 9.78 | SWSS – Springwater Special Situations Corp. (Pre-agreement)
-1.14% ~ $ 10.41 | IPOF – Capital Social Hedosophia Holdings Corp VI (Pre-Deal)
-1.12% ~ $ 10.57 | CND – Concord Acquisition Corp (Announced)
-1.09% ~ $ 9.98 | VCXA – 10X Capital Venture Acquisition Corp. II (Pre-Deal)
-1.01% ~ $ 9.85 | CIIG – CIIG Capital Partners II, Inc. (Pre-Deal)
-1.00% ~ $ 9.89 | IIAC – Investindustrial Acquisition Corp. (Announcement)
-0.94% ~ $ 56.02 | DWAC – Digital World Acquisition Corp. (Announcement)

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