Special purpose acquisition companies (SPACs) have been Wall Street's hottest ticket to the public market, but enthusiasm has cooled in light of the overall market downturn and additional Securities and Exchange Commission regulations.
If parties involved in existing deals want to continue them, they need to revalue them to reflect current market comparisons, Peter Stoneberg, managing director at M&A firm Architect Partners, told CoinDesk. "SPACs have been very volatile overall and are on a downward trend," Stoneberg said.
Last Wednesday, media company Forbes revealed its plans for an IPO via a SPAC with a $630 million valuation through a merger with Hong Kong-based Magnum Opus Acquisition Ltd (OPA). Crypto exchange Binance had previously made a $200 million strategic investment in Forbes in connection with the proposed deal.
In an effort to improve investor protection, the SEC recently stated that it "will propose specific disclosure requirements regarding, among other things, compensation paid to sponsors, conflicts of interest, dilution, and the fairness of these business combinations."
The SEC's report noted that SPACs nearly doubled the amount they raised through such offerings, from more than $83 billion in 2020 to more than $160 billion last year. The SEC added that more than half of all IPOs during those years were conducted through a SPAC.
Stoneberg noted headwinds for SPAC participants. The SEC is now more cautious about the overall SPAC process, especially for crypto-related deals, he added.
Crypto miners and capital
Cryptocurrency miners need a lot of capital for data centers and rigs, but capital is scarce now, Stoneberg said.
"There's not a lot of capital for mining companies or for SPACs right now," he said. The private investment in public equity (PIPE) market was "very active, but today it's pretty much dead."
Here are the crypto-SPAC deals investors are watching:
- Circle, the backer of USDC stablecoin, and its combination with Concord Acquisition Corp (CND). The parties reached a new agreement with an initial outside date of Dec. 8, with the option to extend to Jan. 31, 2023, under "certain circumstances."
- The PrimeBlock mining company with 10X Capital Venture Acquisition Corp. II (VCXA), in a deal expected to close in the second half of the year.
- Miner Bitdeer and Blue Safari Group Acquisition Corp. (BSGA), in a deal that was recently extended.
- Bitmain-backed miner BitFuFu and Arisz Acquisition Corp. (ARIZ), in a deal expected to be listed on Nasdaq in the third quarter.
- Miner Griid Infrastructure and Adit EdTech Acquisition Corp (ADEX), which was expected to close in the first quarter.
- Coincheck, one of Japan's largest crypto exchanges, with Thunder Bridge Capital Partners IV, with the transaction expected to close in the second half of this year.
- Investment platform eToro Group and FinTech Acquisition Corp. V (FTCV). The deal will close by June 30.
- Crypto investment platform Bullish and Far Peak Acquisition Corp (FPAC), with an external termination date recently extended to July 8.
- Digital asset trading network Apifiny Group and Abri SPAC I, which is expected to close in the third quarter.