Even SPACs Are Back

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The WSJ points out some clear evidence of what would be called a growing "risk appetite":

In recent days, a unit of New York investment bank Greenhill & Co. bought Iridium Satellite LLC, the satellite phone operator, for $680 million. And a fund sponsored by Texas investor Thomas Hicks purchased Resolute Natural Resources Co., a Denver-based oil and gas company, in a transaction valued at $582 million.

The deals represent a turnabout for special purpose acquisition companies, also called blank-check offerings, that raise money through an initial public offering and then have two years to buy a business -- as long as the deal receives shareholders' approval. SPACs thrive best in bull markets, when investors are eager to get any edge they can on prospective buyouts.

Prior to the bust, SPACs were IPOing left and right, taking advantage of cheap money and love for all kinds of deal activity.

(If you're unfamiliar with them, the basic idea is that a group can take a shell company public, raise investor money, and then use that money to buy a business. The investors must approve the acquisition, and if they don't, they get their money back.)

What's significant now is that investors are approving SPAC acquisitions, rather than reflexively voting "no" and taking back the cash, which is certainly what they would have done a few months ago during the crisis period.

As the article notes, not all SPAC investors are on board, and some investors, like hedge funds (oy, just think of the layers of fees those poor hedge fund investors are paying), still want cash.

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