Investors continue to build war chests to hunt for acquisitions, with a large chunk of recent U.S. initial public offerings coming from special-purpose acquisition companies.
With nearly $9 billion raised by SPACs in the U.S. market in 2017, excluding overallotments, S&P Global Market Intelligence estimates that last year's crop of SPACs has the resources for upwards of $30 billion in acquisitions.
Since our June 2017 examination of SPAC IPO issuance, acquisition strategy and performance, new SPACs have continued to file registration plans for public offerings. Of the 113 IPOs priced in the U.S. market from June 23 to Dec. 31, 2017, 20 are classified as blank-check companies by S&P Capital IQ. Eight of the top 20 IPOs priced in the U.S. over that period were SPACs, with Social Capital Hedosophia Holdings Corp.'s $600 million issue ranking as the largest SPAC IPO completed in the second half of 2017. SPACs raised a total of $4.80 billion, or almost a quarter of the $19.55 billion in IPO proceeds in the U.S. market between June 23 and year-end 2017.
The recent group of SPACs is seeking acquisitions in a more diverse group of businesses. Our previous examination found five out of 12 SPACs targeting acquisitions in the energy space, but only four of the 20 more recent SPACs are seeking deals in that sector. SPACs are similar to blank-check companies, or corporate shells, which have no operations at the time of their IPO pricing but seek to raise funds for the purpose of a future acquisition. SPACs have a time limit, generally 24 months, to complete an acquisition from the time of their IPO pricing.

The pace of SPAC acquisitions had been sluggish last year between the close of August and the end of October. Only one SPAC-related acquisition was announced, with Andina Acquisition Corp. II agreeing to acquire Lazydays RV SuperCenter Inc. for $261.8 million, including assumed liabilities. The pace has picked up since November 2017, with five SPAC-related M&A deals announced, including two with reported values above $1 billion. One was National Energy Services Reunited Corp., a SPAC that debuted in May 2017, agreeing to combine with Dubai-based National Petroleum Services and Oman-headquartered Gulf Energy SAOC for a total combined purchase price of approximately $1.1 billion. The other involved ConvergeOne Inc. agreeing to acquire Forum Merger Corp., a SPAC that went public in April 2017. ConvergeOne will be a publicly traded company with an enterprise value of approximately $1.2 billion, according to a company release.
Other recent deals include home furnishing company Purple Innovation LLC acquiring Global Partner Acquisition Corp. and oil and gas firms Alta Mesa Holdings LP and Kingfisher Midstream LLC acquiring Silver Run Acquisition Corp. II. Williams Scotsman International Inc., a distributor of modular space products, executed a stock purchase agreement to acquire Double Eagle Acquisition Corp. in a reverse merger transaction in August 2017. And Brazil-based environmental services firm Estre Ambiental SA agreed to acquire Boulevard Acquisition Corp. II in a reverse merger transaction in August.
S&P Global Market Intelligence examined company disclosures and S&P Capital IQ data associated with recent SPAC transactions. Based on disclosed and estimated deal values, we determined the average multiple of deal value to IPO proceeds for these recent transactions to be 3.85x. Using this multiple as an estimate of buying power for those SPAC IPOs priced between June 23 and Dec. 31, 2017, it would be reasonable for these companies to have total resources to make over $18 billion in acquisitions.

Of the 12 SPACs profiled in our June 2017 report, four have been involved in M&A deals. The total proceeds from the IPOs of the remaining companies yet to be engaged in an acquisition, along with Modern Media Acquisition Corp. and Bison Capital Acquisition Corp., are $2.79 billion. Adding that to the $4.8 billion raised by SPACs from June 23 to year-end 2017 yields $7.59 billion. Using our previously calculated deal value-to-SPAC proceeds multiple of 3.85x, we estimate that there could be $29 billion of buying power from those SPACs debuting last year that have yet to engage in a deal. That number, along with those deals conducted by SPACs that came public last year, leads us to our expectation of over $30 billion in M&A deal power for recently priced SPACs.
SPACs last year raised a hefty amount of capital that already has translated into a number of M&A transactions. With IPO filings last month by Nebula Acquisition Corp. and Platinum Eagle Acquisition Corp. and this month by Iron Horse Acquisition Corp. and Mudrick Capital Acquisition Corp., 2018 shows little in the way of a SPAC slowdown.
