Global mergers and acquisitions (M&A) have seen their strongest developments in four decades in the first quarter of this year as special purpose acquisition companies (SPACs) keep doing well, the Financial Times (FT) reported.
This comes even as the pandemic has dealt blows for the global economy, with lockdowns and other related restrictions. There were around $1.3 trillion in deals agreed to in the past three months that ended Tuesday (March 30), more than any first quarter since 1980, according to FT. The amount was even better than the heralded dotcom boom of the late 1990s/early 2000s.
The data showcases the way dealmaking activity has recovered in the past year since the pandemic sent numbers plummeting, FT reported. U.S.-based deals were responsible for much of the frenzy, and they were boosted 160 percent compared with the first quarter of 2020.
The new urgency has given investment banks their best quarter in at least two decades, and they’ve brought in $37 billion in total fees, according to FT.
In the U.S., SPACs totaled $172 billion — or more than a quarter of all deals. SPACs have also been taking on larger deals, with Tesla rival Lucid Motors having the largest to date from February this year when it said it would be going public with $24 billion with a company helmed by Michael Klein, FT reported.
In addition, online broker eToro said it would be going public in a $10 billion transaction with a SPAC, this one arranged by banking tycoon Betsy Cohen, according to FT.
SPACs have been seeing a new level of popularity this year so far, with the method gaining a record number of use cases, PYMNTS reported. So far in 2021, SPACs have raised more than the $83.4 billion they raised in all of 2020, according to industry tracker SPAC Research, which reported that the $200 million initial public offering (IPO) of Build Acquisition Corp. March 16 was the one that catapulted the SPAC values over the record.