Sponsor’s Investment Return

According to Jefferies “SPACs are very compelling for industry executives, as the economics are as or more attractive than traditional private equity fund economics.  SPAC sponsors typically receive 20% of the common equity in the SPAC for an investment of approximately 3% to 4% of the IPO proceeds.  For example, in a $250 million SPAC, the sponsor typically receives approximately $60 million of common stock for a $7 million investment in warrants.

These executives typically have public company experience or have sold their prior business and are seeking new opportunities.  Often they have significant M&A experience and a proven ability to source transactions.   In addition, of the 42 SPAC IPOs in 2019 sponsored by industry executives, approximately 75% of these SPACs have been focused on a specific sector, highlighting again the experience of the management team.”

However only the Master SPAC returns the capital of the Sponsor upon acquisition through IPO time.

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on whatsapp

Latest News & Articles