SPAC Issuers Churn Out New IPOs Despite Blank-Check Tumbles

(Bloomberg) -- Banks and sponsors are pumping out new blank-check firms even as the market for old ones is in free-fall.

Forty-four special-purpose acquisition companies have priced their initial public offerings this year, data compiled by Bloomberg show, despite a 40% drop for a key industry index from its February 2021 peak and a glut of firms looking for targets. If the pace keeps up, this year could see about 264 IPOs, a far cry from last year's record of more than 600, but still more than 2020's hefty count of 248.

The role of SPACs as a bond-like alternative has made the deals attractive to investors amid volatility for the broader market. Matthew Tuttle, chief executive and chief investment officer at Tuttle Capital Management, said his firm is still buying select SPAC IPOs.

“As long as the demand from investors is still there, this won't slow down,” Tuttle said by phone. “You get a deal that comes out with good terms and a management team we like, we'll participate in that.”

The steady flow of newly launched SPACs has been partly fueled by EF Hutton and Cantor Fitzgerald, which have served as left-lead underwriters on 12 deals so far this year, raising more than $2 billion for deals. “EF Hutton's SPAC sausage machine is cranking them out at full blast,” Kristi Marvin, chief executive of SPACInsider, wrote in a weekly newsletter.

“However, the banks are only executing based on demand,” Marvin said in a follow-up email. “You can't IPO if there isn't any demand from both investors as well as the sponsor teams wanting to do them.”

“These investment banks, they don't really care, they'll pop as many as they can pop out because they're making money,” Tuttle said.