Is the SPAC craze over?

Wed Aug 29, 2007



Hedge funds have invested $9 billion in SPACs, but lack of financing could crush the market

By Julie Dalla-Costa



Earlier this summer, U.K.-based hedge fund group GLG Partners announced that it would use a U.S.-based special purpose acquisition company to go public in the biggest announced SPAC deal to date, a new take on a reverse merger. But could this be the last hurrah for SPACs, which have become the darling of hedge fund managers?

The success of a SPAC IPO depends on the likelihood of the sponsors, which are mere shell companies, being able to complete an acquisition. In December last year when access to credit was easy, Freedom Acquisition Holdings completed the largest SPAC IPO to date when it raised $528 million on the American Stock Exchange. On June 25, Freedom announced it would acquire GLG and fund the $3.4 billion deal with its...

ISSN: 2151-1845 / CDC10004H

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