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Sunday, 12 June 2022

Time to call time on SPACs?

SPACs are dead. Interest rates and regulators killed them: It’s looking increasingly like the SPAC boom fueled by the pandemic’s heyday of “easy money” is over, with Wall Street banks reluctant to co-sign new blank-check companies and some rejecting them entirely, the Financial Times reports. Goldman Sachs, which was among the largest SPAC underwriters in 2021, has paused new SPAC offerings and is no longer working with many of those that it helped take public. Bank of America is doing “selective work” with existing clients while Citigroup is also stepping back from the market. “The product is dead. There’s no more SPACs,” one lawyer told the salmon-colored paper.

In numbers: Monetary tightening and increased scrutiny from regulators have hampered the market for SPAC mergers this year. Blank-check firms have raised just USD 12.7 bn, a fraction of the USD 166 bn raised in 2021, according to data from the London Stock Exchange Group, with only 50 SPAC mergers completed, down from 226 in 2021. More than 600 listed SPACs globally have raised money from investors but have yet to find a private company to merge with, according to the LSE.

Analysts say it’s all for the best: “There were too many SPACs and they really piled into the speculative part of the market,” said a senior banker with experience in the market. “What will emerge out of that is a significantly smaller but healthy market for SPACs.”


Regional VC funding cools off: MENA startups raised USD 176 mn last month — the lowest monthly figure so far this year, according to Wamda. The figure was down 40% on the month before, but some 62.7% more than in May 2021. We led the pack, with local startups raising USD 81 mn in 11 transactions — most of which was accounted for by Paymob’s massive USD 50 mn series B round.

Also worth noting:

  • Yet another Gulf IPO: Dubai business park operator Tecom Group is selling a 12.5% stake (c.625 mn shares) through an IPO aimed at raising some USD 500 mn. (Statement)

None

EGX30

10,235

0.0% (YTD: -14.3%)

None

USD (CBE)

Buy 18.65

Sell 18.73

None

USD at CIB

Buy 18.67

Sell 18.73

None

Interest rates CBE

11.25% deposit

12.25% lending

Up

Tadawul

12,604

+0.1% (YTD: +11.7%)

Down

ADX

9,628

-0.2% (YTD: +13.4%)

Up

DFM

3,377

+0.1% (YTD: +5.7%)

Down

S&P 500

3,901

-2.9% (YTD: -18.2%)

Down

FTSE 100

7,318

-2.1% (YTD: -0.9%)

Down

Euro Stoxx 50

3,599

-3.4% (YTD: -16.3%)

Down

Brent crude

USD 122.01

-0.9%

Down

Natural gas (Nymex)

USD 8.85

-1.3%

Up

Gold

USD 1,875.50

+1.2%

Down

BTC

USD 28,473

-2.4% (YTD: -38.9%)

THE CLOSING BELL-

The EGX30 fell less than 0.1% at Thursday’s close on turnover of EGP 653 mn (21.7% below the 90-day average). Foreign investors were net sellers. The index is down 14.3% YTD.

In the green: Eastern Company (+4.8%), MM Group (+2.9%) and GB Auto (+2.5%).

In the red: EFG Hermes (-1.9%), Palm Hills Development (-1.7%) and Fawry (-1.4%).

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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