Abstract

http://ssrn.com/abstract=1284999
 
 

References (22)



 
 

Citations (2)



 


 



SPACs as an Asset Class


Stefan Lewellen


London Business School

March 24, 2009


Abstract:     
Special Purpose Acquisition Companies, or SPACs, have grown into one of the largest segments of the U.S. IPO market, raising more than $20 billion in gross proceeds since 2003. SPACs bear a strong resemblence to private equity funds, yet are largely free of the selection and survivorship biases that are often present in private equity datasets. I find that a portfolio of SPACs resembling "public LBOs" has a market beta near unity despite an average leverage multiple of nearly two, yielding new evidence regarding the systematic risk of leveraged buyouts. I also find that SPACs' highly predictable lifecycle yields highly predictable returns, with a monthly four-factor portfolio alpha of approximately 2% following the announcement of an acquisition and -2% after an acquisition has been completed. Finally, I provide evidence of a persistent discount in SPAC prices prior to the completion of an acquistion, which I attribute to fragmentation within SPACs' unique shareholder base.

Number of Pages in PDF File: 45

Keywords: Special Purpose Acquisition Company, SPAC, Blank Check Company, BCC, Private Equity, Leveraged Buyout, LBO, Initial Public Offering, IPO, Shareholder Voting

JEL Classification: G12, G14, G34

working papers series


Download This Paper

Date posted: October 16, 2008 ; Last revised: March 25, 2009

Suggested Citation

Lewellen, Stefan, SPACs as an Asset Class (March 24, 2009). Available at SSRN: http://ssrn.com/abstract=1284999 or http://dx.doi.org/10.2139/ssrn.1284999

Contact Information

Stefan M. Lewellen (Contact Author)
London Business School ( email )
Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom
Feedback to SSRN


Paper statistics
Abstract Views: 4,106
Downloads: 1,318
Download Rank: 7,102
References:  22
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.563 seconds