SPAC IPOs, merger activity slows down substantially in Q2, S&P Global report says

Initial public offerings and merger & acquisition announcements involving special-purpose acquisition companies (SPACs)slowedsignificantly during Q2, according to an S&P Global Market Intelligence report.

SPAC IPOs as a percentage of traditional IPOS fell to 26.7% in Q2 2021, the lowest level since 25.5% in Q3 2019. That slowdown is largely due to the Securities and Exchange Commission prompting SPACs to redetermine whether warrants they offered to investors are accounted for appropriately on their balance sheets as debt or equity, the report said.

The total number of SPAC IPOs in Q2 2021 dropped to $11.7B from $91.4B in Q1 2021, with the number of deals declining to 52 from 275.

In Q2 2021, global IPOs offered $141.5B of securities in 723 transaction, down from $204.4B in 826 transactions ion Q1 2021 and up from$131.0B in 686 transactions in Q4 2020.

AppLovin(NASDAQ:APP)was thebiggest U.S. IPOin Q2 2021, offering $1.0B in equity, followed byUiPath(NYSE:PATH)at $1.54B and Neuberger Berman Next Generation Connectivity Fund(NYSE:NBXG)at $1.50B.

Q2 2021 marked the third straight quarter in which total announced value of global M&A deals surpassed $1T. Aggregate transaction value of $1.05T in 13,597 transactions in Q2 2021 slipped slightly from $1.08T in 13,802 deals in Q1 and $1.12T value in 15, 177 transactions in Q4 2020.

The three largest U.S. M&A deals announced in Q2 2021 were Canadian National Railway's(NYSE:CNI)acquisition of Kansas City Southern(NYSE:KSU)for $33.7B; Thermo Fisher Scientific's(NYSE:TMO)acquisition of PPD(NASDAQ:PPD)for $21.1B; and Realty Income's(NYSE:O)acquisition of Vereit(NYSE:VER)for $17.3B.

U.S. SPAC M&A activity overall fell slightly during the quarter, with the announced value dropping 44% to $85.2B, while the total number of deals declined 28% to 69.

The largest U.S. SPAC deals announced in Q2 2021 were Soaring Eagle Acquisition Corp.'s(NASDAQ:SRNG)deal to combinewith Gingkgo Bioworksin a transactionvalued at $16.7B; Sports Entertainment Acquisition's(NYSE:SEAH)deal with SGHC for $6.5.B; and Northern Genesis Acquisition II's(NYSE:NGAB)merger with Embark Trucksfor $4.2B.

In the past six months, total return of Thermo Fisher (TMO) and Realty Income (O) stock surpass that of Canadian National Railway (CNI), Soaring Eagle Acquisition (SRNG), Sports Entertainment Acquisition (SEAH) and Northern Genesis Acquisition II (NGAB) as seenin the chart below.

SA contributor Renaissance Capital IPO Research observes that 15 IPOs filed in the past week, including high-profile names Toast and Warby Parker.