It has been a tumultuous year for SPACs as global headwinds have brought the boom to a halt. Yet despite rising interest rates and inflation, and the increasing amount of liquidations, some believe SPACs are not down for the count.
SPACs had a well-publicized run in 2020 and 2021, with 861 public offerings via these vehicles, according to SPAC Insider. In 2022, this figure dropped to 86, a relatively strong count compared to the 12 traditional IPOs over the same time.
But deals have slowed dramatically in 2023 due to a tough deals environment, and since SPACs have 18 to 24 months to complete a transaction before needing to return their investors’ capital, many find themselves these days up a river without a paddle.
To date, there have been 76 liquidated SPACs, according to a recent Moelis report on SPACs. This trend is likely to continue unless dealflow picks up soon. There are over $67 billion of SPACs still seeking targets, according to Moelis.
SPACs are struggling to find targets, especially domestic ones as access to public markets remains challenging. One firm solved their dilemma by going overseas.
Athena Technology Acquisition Corp. II (NYSE: ATEK.U) this week announced a merger with Abu Dhabi-based Air Water Ventures Ltd., a first-mover in direct air-to-water technology which will result in the formation of The Air Water Company. AWV is a producer of quality drinking water at a lower cost and environmental impact than bottled water. The firm additionally boasts proprietary technology that delivers quality drinking water.
Isabelle Freidheim, founder and chairman of Athena, a women-led SPAC out of New York, says the merger fit perfectly with their SPAC strategy.
“This business combination is expected to expand Air Water’s global reach and accelerate its growth while providing funding to continue its disruptive innovation efforts and proven sustainable technology that delivers consistent high-quality drinking water,” she says. “There is significant appetite for air to water technology from blue chip corporations, big hotel groups, big schools in a wider market, outside of the UAE, across the Middle East into Southeast Asia and ultimately the U.S. as well.”
Her firm notes that the new technology is not reliant on greater energy transition. It believes in the rapid global uptake in meeting demand and scale as a driver in taking the firm public in this environment.
Freidheim is still bullish on SPACs’ prospects.
“Don’t count out these vehicles,“ she says. “The SPAC innovation curve is not over. Rather, there is more innovation out of necessity. We’re seeing transformation in the SPAC product. Meanwhile, companies continue to innovate and are in need of capital – the backlog is growing.”
Do you think we’ll ever see another SPAC craze as we did in 2021? Let me know your thoughts at [email protected].
–Cole Lipsky
