SPACs return, 9 companies raised $2 billion, trading volume hits a new high in 2022

With the escalating expectations of the Federal Reserve, the long-dormant SPAC market has ushered in a new spring. Data shows that in August, 9 special purpose acquisition companies listed in the United States raised $2 billion, marking the largest trading volume and revenue since the beginning of 2022. SPAC Makes a Strong Comeback with Impressive Performance According to SPAC Research data, since May, SPAC returns have been on the rise, although the growth has not been uniform. In this wave of revival, Avi Katz's GigCapital Global completed five transactions, while Howard Lutnick and Asian casino tycoon Lawrence Ho's family office each priced their offerings last month. Notably, the company led by Cantor Fitzgerald LP, with Lutnick as CEO, has played a key role as a banker and supporter in the SPAC field, with data showing that the company has sponsored at least 9 blank-check companies. Among them, conservative video network Rumble Inc., backed by Peter Thiel, is one of the companies listed through SPAC, but most stocks have been declining since going public. Black Spade Acquisition II Co. is a subsidiary of Ho's Black Spade Capital, which raised $150 million. The company first listed Vinfast Auto Ltd. through SPAC last year, with a valuation of $27 billion. Josef Schuster, founder and CEO of IPOX Schuster, a provider focused on newly listed indices, stated: "The SPAC structure has not been shelved—companies realize that an IPO may not be suitable for everyone. When companies seek to go public, it is a wise choice to engage in smaller transactions in riskier sectors or larger-scale industrial mergers." Why the "Silence"? SPAC Research data shows that there are currently about 100 blank-check companies seeking trading opportunities, with 20 new transactions launched in the past three months. Some analysts believe that this indicates that financial conditions are easing enough to give companies more confidence in going public through SPAC. However, compared to the SPAC bubble period, the market size is still far from it, with over 600 pre-transaction companies in the market at that time. Previously, SPAC enjoyed glory in 2021, but soon after, the bubble burst and gradually "fizzled out" in the high-interest rate environment initiated by the Federal Reserve. It is reported that the main reasons for the downturn in the SPAC market include rising inflation and high-interest rate environment, poor performance of newly listed SPAC companies, increased macroeconomic uncertainty, and enhanced regulatory scrutiny by the U.S. Securities and Exchange Commission (SEC) The Fed's interest rate cut this time is a "savior" for SPACs. The market expects the Fed to start cutting interest rates on September 18th. The Fed's swap trading shows that it is expected to cut interest rates 1.4 times this month, and may cut rates up to 4.2 times by the end of the year