SPAC IPO Terms Tracker: The Fourth Quarter Begins


SPAC IPO Terms Tracker: The Fourth Quarter Begins

Oct 8, 2022 INTEL by sam.beattie

Terms Tracker for the Week Ending October 7th, 2022

Welcome to our weekly column where we discuss the findings from our IPO terms tracker based on the previous week’s pricings.

The first week of October ended on a comparatively similar note as the few weeks prior, with one new S-1 registration statement and one IPO. Plutonian Acquisition Corp., underwritten by EF Hutton, marks the first of the month and is also the first we’ve seen since September 13th. On an interesting note, five of the last 10 new S-1 registration statements have been underwritten by EF Hutton, showing they have not slowed down.

The total SPACs in registration took a slight dip from 108 to 104, while the total number of SPACs searching for targets fell from 552 to 543 the week prior. The changes to the filed column were due to four registration withdrawals – as the new S-1 and the IPO canceled each other out. The changes to the searching column were a result of five deal announcements, five liquidations, and one termination.

[Read here for a refresher on our methodology]

Terms Tracker Data

The Terms Diffusion Index rose this week from 49.55 to 49.82 on the account of there being only two-term changes compared to five last week. So far, it seems we are likely to see the same pattern of fluctuations in the terms tracker as it still does not quite capture investors’ risk appetite in this current market environment.

The term changes came from Phoenix Acquisition Limited (PHEX), underwritten by Ladenburg Thalmann, which increased their warrant coverage from 1/3 to 1 full warrant, and Bellevue Life Sciences Acquisition Corp. (BLAC), underwritten by Chardan, which overfunded further from 101.0% to 102.0%.

  • The Terms Diffusion Index oscillates around 50.0, assigning a 1.0 value to all positive changes, a 0.5 value to “no changes”, and a 0.0 value to negative changes. Therefore, readings above 50.0 would indicate SPAC terms were loosening on the week, while a reading below 50.0 signals tightening.

IPO Performances from Last Week

As mentioned above, there was one IPO this week, marking the first for the month of October. Aquaron Acquisition Corp. (AQU), underwritten by Chardan, priced it’s $50M IPO on Tuesday, October 4th, and traded with a day-one VWAP of $10.0126. AQU has a 101.5% funded trust ($10.15/unit) showing that the SPAC traded -1.35% below net asset value.

Although we are only a quarter of the way through the month, we can see IPO performance has already performed better than the averages we’ve seen in August and September. With only one IPO so far, only time will tell if the day-one performance for the month of October will show improvement.

Note: Based on the unit’s (or share’s) day-1 VWAP.