The SPAC boom continues to churn out heavy capital, as Foresite prices its $175M blank check company and 2 others file
Having returned to the SPAC well last month in the hopes of riding last year’s boom, Foresite’s second blank check company priced earlier this week.
Known as FS Development II, the Jim Tananbaum outfit announced Wednesday it had raised $175 million in an upsized offering, and priced at $10 per share. The public debut comes about seven months after Tananbaum launched his first SPAC, and only four months after that SPAC went public in a reverse merger with Gemini Therapeutics.
Tananbaum’s Gemini deal has proved somewhat fruitful thus far, as the company is up 25% in the four months since its merger. At the time, he had been looking for a specific type of company with a genetics-driven platform, and found one in Gemini. The company specializes in tailor-making treatments for subpopulations of patients with macular degeneration based on their genetic variants.
The S-1 offered few details on potential targets for the new SPAC beyond the language that’s become commonplace in these types of companies. Tananbaum will have two years to find a partner, but if the market trend continues he won’t nearly need that much time.
Though it’s a quick return to Wall Street for Foresite, other firms have moved quicker. Perceptive Advisors raised a $130 million SPAC in June and returned before the end of July to raise another $125 million. By that point, the firm was evidently nearing a deal for the first SPAC, which announced a half-billion-dollar merger with Cerevel Therapeutics on July 30.
Foresite’s new SPAC comes amid a wave of investors raising capital for these blank check companies, despite most ending up waiting several months before completing their mergers. And the pricing comes in a week where two other high-profile VCs announced their SPACs. Prominent Silicon Valley firm Khosla Ventures is seeking to raise $1.2 billion for three blank check companies at once, while Eduardo Bravo is taking the SPAC boom to Europe with a $100 million promise.
On top of that, another two SPACs filed just Thursday evening, with Falcon Edge Capital’s Rick Gerson looking to raise $200 million in a holding company and Acutus Medical’s Scott Huennekens seeking a $175 million raise. Even billionaire Richard Branson is hopping into the game, taking 23andMe public earlier this month as it seeks to build out its GSK-partnered drug development business.
The vast raises and burgeoning number of SPACs themselves have come as analysts are starting to wonder just how long this boom can last. Private investor Brad Loncar has written about the SPAC boom on Twitter, including when Foresite first filed its holding company.
One reason I think this market eventually fizzles out if not outright collapses is with all the SPACs happening, competition for targets increases and returns may rationalize or inverse. When the fast money returns go, so will the investors supporting them. I'm very skeptical.
— Brad Loncar (@bradloncar) January 26, 2021