Investments by sovereign wealth funds into special purposes acquisition companies – vehicles that raise IPO money for the purpose of acquiring companies – have skyrocketed amid capital injection to feed cash-starved firms.
As of November 24 this year, sovereign wealth fund investments in SPACs totaled $1.79 billion – up over 2,532 percent year-on-year compared to 2019’s $68 million, according to data acquired by «finbold.com».
In 2018 and 2017, the figures stood at $20 million and $50 million, respectively.
Sweet Spot
In addition to demand for capital from corporates, the investment surge into SPACs has been driven by the vehicle’s relative flexibility and cost-effectiveness compared to traditional IPOs.
Traditional IPOs are also facing increasing scrutiny over how they are priced for trading.
