Around 130 SPACs have gone public this year – more than in the first 9 months of 2020 – as the Wall Street craze goes into overdrive

Around 130 SPACs have gone public this year – more than in the first 9 months of 2020 – as the Wall Street craze goes into overdrive

The mania for blank-check companies that took off in 2020 has exploded in 2021, with 133 SPACs raising around $40 billion on the US stock markets as of Wednesday - and celebrities like Colin Kaepernick getting in on the new Wall Street craze.

It took until early October in 2020 for the 133-SPAC mark to be reached, according to data from investment firm Accelerate, giving a sense of the boom in popularity of special purpose acquisition companies. Just shy of 250 SPACs went public in 2020.

A SPAC is an entity that exists solely to list on the stock exchange to raise money, in the hope of finding and merging with a target company to take it public.

The model can be extremely lucrative for the initial sponsors of the SPAC, who take a big stake for a small sum - often 20% for a nominal price of $25,000. For example, Bloomberg reported that Alec Gores turned one $25,000 stake into an $80 million pay out. SPACs also offer the target companies a less costly and demanding way to go public.

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