Is anything too big to be SPAC’d?

While many deemed 2020 the year of SPAC, short for special purpose acquisition company, 2021 may well make last year look quaint in comparison.

It’s probably not premature to be asking: is anything too big to be SPAC’d?

Just today, we saw the trading debut of the most valuable company to date go public through a merger with one of these SPACs: 35-five-year-old, Pontiac, Michigan-based United Wholesale Mortgage, which is among the biggest mortgage companies in the U.S.

Its shares had slipped a bit by the end of trading, closing at $11.35 down from their starting price of $11.54, but it’s doubtful anyone involved is crying in their cocktails tonight. The outfit was valued at a whopping $16 billion when its merger with the blank-check outfit Gores Holdings IV was approved earlier this week.

A few things worth noting here. First, unlike a traditional IPO, which can require 12 to 18 months of preparation, UWM’s path to going public took less than a year, beginning with Gores Holdings IV completing its IPO in late January 2020 and raising approximately $425 million in cash. Alec Gores, the billionaire private equity titan and founder of Gores Group, led the deal. It isn’t clear when Gores approached UWM, but the tie-up was announced back in September and ultimately included a $500 million private placement. (It’s typical to tack-on these transactions once a target company has been identified and accepts the terms of the proposed merger. Most targets are many times larger than the SPACs.)

Also notable — beyond the big valuation involved — is that UWM is a mature company, one that says it generated $1.3 billion in revenue in the third quarter of last year alone. UWM CEO Mat Ishbia, whose father started the company in 1986, said last fall in a statement about its deal with Gores: “We’re massively profitable, with massive growth and massive success, and this is going to throw fuel on the fire.”

It’s a story unlike that of many earlier outfits to go public through the SPAC process. Many — Opendoor, Luminar Technologies, Virgin Galactic — are still developing businesses that need capital to keep going and which might not have found much more from private market investors.

Indeed, today’s deal would seem to open up a new world of possibilities, and for companies of all sizes.

One thing is clear. It isn’t likely to hold the record for ‘biggest SPAC deal ever’ for long. Not only is interest in SPACs as feverish as ever, billionaire investor William Ackman is still sitting on a $4 billion SPAC to which he has said he’ll throw in an additional $1 billion in cash from his hedge fund, Pershing Square Capital.

You can bet the deal will be a doozy. Reportedly, Ackerman was at one point looking to take public Airbnb with his SPAC, which was raised in  July. When Airbnb passed, he reportedly reached out to the privately held media conglomerate Bloomberg (which Bloomberg has said is untrue).

With the SPAC yet to announce a tie-up and the clock ticking — SPACs typically complete a merger with a private company in two years or less — speculation has begun to run rampant about what he’ll put together.

In the meantime, there have already been 59 SPAC offerings this year — as many as in all of 2019 — and they’ve raised $16.8 billion. Just this week, Fifth Wall Ventures, the four-year-old, L.A.-based proptech focused venture firm, registered plans to raise $250 million for a new blank-check company.

Intel Chairman Omar Ishrak, who previously ran medical device giant Medtronic, is planning to raise between $750 million and $1 billion for a blank-check firm targeting deals in the health tech sector, Bloomberg reported on Sunday.

Gores Group isn’t done, either, by the way. On Wednesday, it registered plans to raise $400 million in an IPO for its newest blank check company. It is the group’s seventh SPAC to date.

There are now so many companies to go public through a SPAC exchange-traded funds that invest in them are beginning to pop up and they’re putting together baskets of SPAC deals for investors who want to hedge their bets.

The very newest fund, reported on earlier this week by the WSJ and overseen by hedge fund Morgan Creek Capital Management and  fintech company Exos Financial, will be actively managed and snap up stakes in firms that recently went public by merging with a SPAC, as well as shell companies that are still on the prowl.

It will be joining the world’s first actively managed exchange-traded fund focused on SPACs, the Calgary-based Accelerate Arbitrage Fund, which launched in April of last year. A second ETF, the Defiance NextGen Derived SPAC ETF, emerged in October.

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