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SPAC returns fall short of traditional IPO returns on average

July 28, 2020

Bill Ackman's Super-SPAC Pershing Square Tontine Holdings (PSTHU) raised $4 billion with great fanfare in the largest SPAC offering of all time. Looking to take a "mature unicorn" public, the blank check company is only the latest milestone in what is already a banner year for SPACs. While the space is rapidly evolving, most SPACs fail to live up to the hype.

Key Takeaways

  • 2015-2020 SPAC IPOs have underperformed post-merger
  • SPAC mergers in 2019-2020 have outperformed those in 2016-2018
  • Larger SPAC mergers have outperformed smaller transactions
  • Healthcare and tech-focused SPACs have outperformed; energy has underperformed

Of the 223 SPACs IPOs since the start of 2015, 89 have completed mergers and taken a company public. Of these, the common shares have delivered an average loss of -18.8% and a median return of -36.1%, compared to the average aftermarket return of 37.2% for traditional IPOs since 2015. Only 26 of the SPACS in this group (29.2%) had positive returns as of Friday's close.

Recent SPAC mergers have outperformed the broader group...

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