A new report from the Lufthansa Aviation Hub argues that initial public offerings backed by special-purpose acquisition companies (SPACs) have fallen out of favor recently, following a period early last year when they accounted for 90 percent of all money raised on public markets in the U.S. The German airline’s research arm spells out the reasons behind this claimed shift in fortunes and explains its significance to the advanced air mobility sector.
Ultimately, 2021 recorded more than 600 SPACs—a record high far beyond anything financial markets had seen before. SPACs—which the report describes as essentially big pools of cash listed on a stock exchange—allow investors to find a private company, buy it, and take it public quickly. Wall Street insiders refer to SPACs “blank check companies” because investors backing a SPAC invest their money up to two years before the identification of an acquisition target, hoping that the instrument’s sponsors find a good deal.
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