SPACs

No surprise: Goldman Sachs pulls SPAC offering

Jim Kim — Wed, 28 May 2008 21:16:06 -0400

Goldman Sachs bowed to reality this week when it decided that it couldn't take Liberty Lane after all. The offering for the special purpose acquisition company (SPAC) was being closely watched as a test of how the once-vibrant SPAC market was holding up. As of now, it looks like the entire market will be put on hold. Goldman Sachs couldn't find enough buyers despite some compelling reasons, notes the New York Times. Liberty Lane insiders took just 7.5 percent of the equity, compared to a more standard 20 percent. In addition, some of the warrants held by insiders had relatively high strike prices. But despite an unusually investor friendly deal, it couldn't be priced. That says a lot about the market. Look for more SPACs to return funds to investors soon.

For more:
- here's the New York Times article

SPAC boom starting to wane

Jim Kim — Tue, 27 May 2008 19:13:35 -0400

Special purpose acquisition companies were hot tickets earlier this year, a rare bright spot in the IPO market. But FINalternatives notes that the boom seems to be over--for now anyway. Many SPACs are having a lot of trouble finding suitable investments. The prospects that some will return funds is real. The result has been that many recently offered SPACs are languishing below their offer price. So it'll be a while before more SPACs come to market. It's unclear how all this will affect hedge funds that launched their own funds or funds to invest in SPACs. Many are hoping for some improvement in the deal-making environment. The best source of good investments may come from private equity firms.

For more:
- here's the FINalternatives article

NYSE's SPAC move: Misguided?

Tue, 20 May 2008 06:59:56 -0400

We've spoken a lot about the rise of special purpose acquisition companies, or SPACs. They were all the rage over the past few years, as more top investment banks got involved with them. They were fees to be had, of course. But the deal environment has worsened obviously, and that is making it hard for some SPACs to invest their newly raised funds. Share prices have been under pressure, and there is speculation that some SPACs may have to return funds. So it is interesting to read, in Traders Magazine, that the NYSE's marketing has paid off: A SPAC will move to the Big Board from the Amex. That would mark a first. Some might say the NYSE's marketing efforts are too late, but perhaps the time to make a push is when things are at a trough.

For more:
- here's the Traders Magazine article