Anchor investors weigh down SPACs

·1 min read

Reproduced from SPAC Research; Chart: Axios Visuals

Special purpose acquisition companies (SPACs) have increasingly turned to anchor investors to pull off IPOs — but it appears these backers tend to dump the stock soon after the offerings.

Driving the news: Deals in which at least 75% of the capital came from anchors have underperformed those in which anchors made up less than 25%, according to SPAC Research.

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Context: As we noted in September, one byproduct of a weakened demand for SPAC IPOs among investors has been the uptick in anchors, who make early commitments to buy large chunks of the IPO.

  • Sponsors often offer anchors more favorable terms, like the opportunity to receive founder shares.

  • The trend has some investors worried that it may be a sign of low-quality SPACs that need expensive sweeteners.

The bottom line: Anchors may be getting sweet deal terms, but it's not enough to hold on.

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