As so-called blank check companies contend with souring stock-market sentiment, those that focus on environmental and social investing are being hit particularly hard
SPACs and green companies were two of the hottest pandemic investments. Combining the two—green SPACs—has been even more profitable, but there is evidence this is changing.
For years, those deals have paid off. Going back to 2016, green-focused SPACs that have completed their acquisitions have outperformed other SPACs that have done deals, according to a Dow Jones Market Data analysis of information provided by SPAC Research.A pre-markets primer packed with news, trends and ideas. Plus, up-to-the-minute market data.In the 90 days after their deals closed, SPACs with a green focus posted average share-price gains of just over 10%, according to that analysis.
The weak performance may point to a deeper problem with SPACs and specifically green investments: There is too much money chasing too few good companies. SPACs have big incentives to make deals; if they don’t spend the money within two years, their terms require theyThose SPACs that have pledged to go green have a smaller number of companies to choose from. Many of those that remain are speculative businesses with big ambitions but little or no revenue.
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