The 7investing Podcast Should You Invest in SPACs? (Part 1)
Special purpose acquisition companies -- commonly known as "SPACs" -- are becoming increasingly popular in recent years as a way for companies to reach the public markets. While there were only 59 companies that chose to do a "SPAC IPO" in 2019, more than 360 have already taken place thus far in 2021. The total value of funds raised from those SPAC IPOs this year has exceeded $112 billion, and there are reportedly more than 300 more SPACs that have raised funds and are looking for a target.
But what will the modern SPAC Race mean for investors? Is this indeed a more capital-efficient way for companies to raise money and go public? Or are investors throwing money at an unproven and potentially dangerous new trend?
To answer those questions, 7investing Lead Advisors Simon Erickson and Steve Symington are digging deeper into the recent SPAC craze. In part one of their two-part podcast series, Simon and Steve give an overview of how SPACs are structured and why financial sponsors are incredibly important to their success. The two also discuss specific metrics that investors should be watching and specific risks they should consider.
Publicly-traded companies mentioned in this podcast include Virgin Galactic and SoFi. 7investing Lead Advisors may have positions in the companies that are mentioned. This interview was originally recorded on July 8th, 2021 and was first published on the same day.
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