Journalists are rummaging through their pun drawers for ways to describe the deluge of special purpose acquisition companies (SPACs) that have hit markets over the past year.
SPACs are essentially blank cheque companies which raise money in an initial public offering with the aim of buying a private firm and taking it public.
Already this year, 144 SPACs have raised $45.7 billion, data from SPAC Research shows, often backed by high-profile investors and celebrities.
The trend is not without bad press. Investment banks managing the deals earn fees by finding the SPAC a company to acquire — within two years. That raises fears of insufficient due-diligence.
While primarily a U.S. phenomenon, SPACs are sprouting in Europe too. Ex-UniCredit CEO Jean Pierre Mustier, and German tycoons Christian Angermayer and Klaus Hommels have announced SPACs.
SPAC launches are plentiful but how actual acquisitions — or “deSPACing” — develop will show whether the trend lasts.