Oh good grief.
From PitchBook, February 16:
Some of the world's largest asset managers from Blackstone to BlackRock have signaled an appetite to invest in socially responsible companies—and special-purpose acquisition companies are all too happy to serve them.
More than 20 SPACs have launched with environmental, social and governance principles in the past year, raising more than $5 billion through their IPOs, according to PitchBook data.
The trend is driven in part by a sense that demand for publicly traded, socially responsible companies has quickly outstripped supply. These SPACS are trying to add more ESG-friendly companies to a dwindling list that meet the criteria. Last year, assets in ESG funds ballooned 67% year-over-year to $1.65 trillion, according to Morningstar data.
"There aren't many [publicly traded] companies for those ESG funds to invest in," said Nicole Neeman Brady, CEO of Sustainable Development Acquisition I, a blank-check company that raised $316 million in an IPO earlier this month.Brady's company, launched as a partnership between Renewable Resources Group and Capricorn Investment, is one of the first SPACs to pursue a B Corp designation—a private certification of social and environmental performance issued by the nonprofit B Lab—by either merging with an existing B Corp or helping a target company achieve that status.
The nature of SPACs makes them well-suited to the low ESG company supply problem: They present a comparatively fast way for companies to go public and take advantage of favorable market conditions.Some socially responsible companies are also seen as high-growth, another factor that makes them ideal targets for SPACs, given the high valuations that growth-oriented companies currently command on Wall Street.
Electric vehicle makers, in particular, have been the target of a torrent of SPAC deals. And many of those deals were with blank-check companies without an ESG mandate.
But the frenzy around EV companies has also flooded the market with new entrants. ...
....MUCH MORE
