SPAC recovery aided by changing political environment
Special purpose acquisition companies have resurfaced as an alternative way to access the public equity markets, buoyed by changing politics under the Trump administration and expectations of lower interest rates.
Kyivstar, a Ukrainian telecoms, and online gun retailer GrabAGun are among the eclectic class of companies that have cashed in on renewed investor enthusiasm for the structure.
“The SPACs we’ve seen IPO in the past year all have repeat, serial sponsors with experience in the field,” said Kristi Marvin, founder and CEO of SPACInsider. “As they’re better-quality sponsors, they should bring better quality – in theory.”
So far this year 34 companies have gone public by merging with US-listed SPACs, including both Kyivstar and GrabAGun, for a total consideration of US$22bn. Another 42 mergers for US$18.8bn of consideration have been agreed but have yet to close, according to LSEG data, based on publicly disclosed information.
Those numbers put SPACs on pace to eclipse the US$39.6bn across 85 mergers completed in all of 2024.
At US$7.7bn, online brokerage WeBull’s merger with SK Growth Opportunities is the largest transaction completed this year, followed by the US$3.6bn merger between Tether-backed crypto hoarder Twenty One and Cantor Equity Partners that has been agreed but has yet to close.
SPACs have long been derided for poor performance and/or hyper volatility. WeBull and Cantor Equity Partners/Twenty One were trading on Wednesday at US$14.44 and US$23.20, respectively – above the US$10.00 per share SPAC IPO price but after having traded as high as US$79.56 and US$59.75 shortly after their mergers were announced.
High redemptions by SPAC investors are another criticism – deals are agreed to, but the funding falls away.
GrabAGun and Kyivstar both stand out for the high amount of SPAC IPO funding they were able to retain. Of the US$170m raised on its IPO, GrabAGun merger partner Colombier Acquisition II saw minimal redemptions – with only 0.03% of the money redeemed, according to Marvin.
GrabAGun, which touts itself as a “defender" of the second amendment right to bear arms, benefited from close ties to the Trump administration given Donald Trump Jr is on the board of directors.
Of the US$230m raised by Kyivstar merger partner Cohen Circle Acquisition on its IPO, SPAC investors committed US$178m to the merger, the second-lowest redemption rate on SPAC merger completed this year, according to Marvin.
That US$178m included US$50m combined that Clearline Capital and Helikon Investments had pledged upfront.
Kyivstar benefited from being a subsidiary of global telecoms VEON, the former VimpelCom.
Number one
"Kyivstar is compelling because it has demonstrated predictable growth over time and has the number one market position," said Robert Berger, a managing director with Rothschild, which advised VEON on the merger. "Investors can sleep well at night knowing whatever happens with the war, people are still going to keep using mobile phones."
In the first half of 2025, Kyivstar generated US$309m of adjusted Ebitda on revenue of US$1.04bn despite the ongoing Russia-Ukraine conflict. The fact that users pay just US$3.40 monthly, well below the US$10-plus rate in other Central and Eastern European countries, provides upside to financial results.
There may also be money to be made from post-war reconstruction. Hopes of a resolution after Ukrainian president Volodymyr Zelenskiy met Trump earlier this month saw Kyivstar shares spike to as high as US$16.48 before falling back to US$12.22.
“Investors broadly are still sceptical of SPACs and wearing scars from 2021," Berger said. "But they are willing to entertain [deals] if there are compelling stories or segments that are working.”
Also, with US Federal Reserve chair Jerome Powell hinting at imminent rate cuts, investors are piling back into riskier bets – including SPACs.
Growing enthusiasm on the M&A front has seen investors commit US$17bn of capital to new US-listed SPAC IPOs so far this year, already topping the US$10.1bn raised in all of 2024 and the highest level since the record-high US$169.8bn raised 2021.
