Investors who put funds into blank check companies will likely see a liquidity boost of more than $75 billion in the next six months, as special purpose acquisition companies (SPACs) that went public during the listings boom will probably have to return their cash.
The Financial Times wrote Sunday (Sept. 4) that the potential surge in liquidations would eliminate one of the final remnants of one of the biggest market frenzies of the past few years. Per the report, it’s going to help investors get back the cash they need after losses ravaged them during this year’s market downturn.
Most SPACs have a two-year time limit to close an acquisition of a private company before they have to return the raised funds to investors.
Around $75 billion worth of SPACs are going to hit their expiry date between now and the end of February. There’s also likely to be another $36 billion as of next March, per data from Spac Research.
PYMNTS wrote about the phenomenon in August, writing that the hard part of being a SPAC was getting the deal done. Those that don’t find themselves able to do it have the long road in front of them, which had already begun in August for many payments companies.
See also: Payments SPACs Face Reckoning as Clock Runs Out on Investment Deadlines
Bloomberg wrote around that time that some SPACs had been pushing back their investment deadlines as of mid-August. Some companies were already becoming casualties, with Bill Ackerman’s Tontine Holdings having liquidated earlier in the year.
At the time, two SPACs launched by Chamath Palihapitiya were also looking at resetting their acquisition deadlines to 2023, but Bloomberg noted that the ease of inking a deal wasn’t likely to be much better by then.
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