Betsy Cohen Predicts About a Third of SPACs Will Bust

(Bloomberg) -- Blank-check sponsor Betsy Cohen said about 30% of all special purpose acquisition companies in the market will fail, in an interview on Wednesday at the Bloomberg Invest Global conference. 

“Either they won’t be able to find companies in the time frame or they will find companies within that time frame but the public market investors will not support them,” Cohen said. 

She added that traditionally a private investment in public equity (PIPE) gets raised to validate valuations in transactions but that’s now changed.

Private equity firms are increasingly showing up in deals in the PIPEs and as the sponsor, which she called an inherent conflict and “probably not a good thing.” 

“Public investors are very quick to understand that the valuation hasn’t been validated by anybody except people with an interest in completing the SPAC,” Cohen said.

After having raised nine SPACs and completing deals such as taking investment bank Perella Weinberg Partners public, Cohen is still bullish on them. She said that the market is in the middle, not end of the trend.

The pandemic showed how global fintech and technology can be, she added, and she’s now looking at foreign exchanges to potentially raise a SPAC. Exchanges in Frankfurt, Amsterdam, Paris and Singapore all allow for them.

One hurdle to the plan could be that SPAC targets might prefer listing in the U.S.

“The U.S. markets are often the most liquid and so it’s a matter of finding the right target that’s comfortable on a newer and less tested exchange,” Cohen said. 

©2021 Bloomberg L.P.