A Look at Pitchbook’s New DeSPAC Index

April 13, 2022

With the IPO market icy, Pitchbook recently released an interesting take on the SPAC (special purpose acquisition companies) world – what they call DeSPAC). Here’s a review.

Pitchbook DeSPAC Index vs S&P 500

The first view released by Pitchbook on recently public companies follows below. Interestingly, although probably not surprising for follows of the sector, the S&P 500 has far surpassed the performance of DeSPAC companies since 2018. Overall, over this period the S&P 500 is up about 1.4x, while the DeSPAC is down by about 0.6x.

Source: Pitchbook

On a year-to-date basis (YTD), the picture also looks brighter for the S&P 500. Overall, the S&P 500 is down a little, while the DeSPAC is down about 0.7x.

Source: Pitchbook

SPAC IPO Activity

With this picture in mind, the following figure, which shows SPAC IPO activity, paints a picture of relatively low activity through in the first quarter of 2022 at just around 75 deals and aggregate post-money valuations of around $20 billion. This is a sharp drop from the first of 2021 peak, which saw deal counts reach more than 300 and aggregate post-money valuations soar to a whopping $110 billion. Times change!

Source: Pitchbook

The Median and Average SPAC IPO Size

The next view Pitchbook released was that of the median and average SPAC IPO size from 2018 through the first quarter of 2022. Overall, deal values continued to rise from 2018 through 2020, slowed slightly in 2021, and then exhibited further weakness in the first quarter of 2022. As of writing, Pitchbook had the median IPO size at $100 million and the average deal size at $126.5 million.

Source: Pitchbook

Completed SPAC Activity by Quarter

The next view is of completed SPAC acquisition activity by quarter. Overall, activity picked up significantly beginning in the fourth quarter of 2020, and peaked in the third quarter of 2021 at around 90 deals with aggregate exit values of around $100 billion. The most recent estimate for the first quarter of 2022 has deal counts down to 30 and aggregate exit size of around $20 billion.

Source: Pitchbook

A Couple Final Views

The final two charts provide an interesting view of the SPAC area by PIPE participation. Overall, deals with PIPEs are still elevated relative to the early years of reporting in 2019. As of writing, around half of all SPAC acquisitions involved PIPE deals. This is down from the 2020 third quarter peak of around 90%, but still higher than the 2019 and 2020 figures.

Lastly, the median and average SPACE PIPE deal size is down significantly in the first quarter of 2022, to $100 million (median) and $156.7 million (average). The figures stood at $192.5 million (median) and $329.0 million at the end of 2021.

Source: Pitchbook

Summing Up

Overall, the past few years have been wild rides for SPAC investors. Based upon continued investor interest, we may be up for some more wild rides in the years ahead.

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