Elliott Management, a hedge fund, will be investing in a special purpose acquisition company (SPAC), even as those have lost much of their appeal, a Financial Times report said Sunday (April 24).
The SPACs, while once darlings, have recently not been doing well, leaving dealmakers starved for investors.
But Elliott along with Siris Capital, a New York firm, will be putting $20 million into the pipe of a SPAC deal for Mondee, the travel tech group. The deal puts Mondee’s value at $1 billion.
The Mondee deal has bucked a trend in SPAC deals — showing that despite the flaws, investors have been willing to pay for attractive companies with successful records, a shift from the startups that have been a staple of the SPAC market in the better times.
SPACs had done well through the pandemic, with sponsors raising money from investors and publicly listing the vehicles as a cash shell, before looking for private companies to merge with.
SPACs, after listing on the stock market, usually need more capital to fund the acquisition though what’s called a pipe.
But SPACs have struggled with securing the pipe funding to make deals, however. And as the appetite for the SPAC deals has waned, pipe funding has been scarcer, too, the report said — with dealmakers forced to sweeten terms to get the coveted financing.
PYMNTS wrote that Navigation Capital Partners nixed its plans for four SPAC companies in less than a day recently.
That has come with the general trend of companies not doing so well in that area.
Reports showed Navigation not planning to go forward with plans for its Navigation Capital Acquisition VI, VII, VIII and IX.
The goal was to raise $150 million for each individual deal.
That brought the number of aborted SPAC filings to seven, which was the second biggest wave since mid-March.