SPAC Sponsors That ‘Piled In’ During Boom May Face $4 Billion Tab
- Teams that were late to the craze seen losing the most money
- Failed ventures typically cost sponsors about $8 million
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Blank-check sponsors that jumped on the bandwagon to cash in on the SPAC boom may be stuck with a roughly $4 billion bill as they close up shop and return money to investors. That’s on top of the estimated $352 million they’ve already lost this year.
The SPAC craze was a goldmine for sponsors like “SPAC King” Chamath Palihapitiya and Howard Lutnick. They were early to the game and benefited from a bull market that bolstered the industry with investors eager to pay large premiums for a pile of cash. Now that the bubble has burst, sponsors who “piled in during the boom in 2021” could lose billions, according to Jay Ritter, professor of finance at the University of Florida.