Gimede Gigante

The extraordinary growth of China from the early 2000s until now made it one of the biggest economies in the world. Over the years, more and more Chinese companies merged with the U.S. listed special purpose acquisition companies (“SPACs”) to become public and attract foreign capital. This paper examines the differences between this specific subsample of SPACs focused on completing a merger with a business located in China among those listed on the U.S. Stock Exchanges and the other U.S. listed SPACs. The intent is to verify whether the sample differs from the rest of the market in their main characteristics, have better, equal, or worse prospects of completing a merger, and offer better, equal, or worse returns to investors. 329 SPACs were identified, of which 41 targeting Chinese businesses. Logistic regression is performed to understand whether the China market focus influences the chances of consuming a business combination. Moreover, two different models (event study approach and buy-and-hold approach) are implemented to assess the share performances of the two subsamples. The conclusions that stem from the obtained results are that China-focused SPACs differ consistently from the rest of the market in certain features but need similar time to identify a target and close the deal. Focusing on China seems to be beneficial for the SPAC’s prospects of closing a deal, being statistically significant at a 10% level. Last, a portfolio composed of the sample SPACs’ shares overperforms the non-China one in both the short and long terms.

Acknowledgment
The authors would like to thank their brilliant student, Mr. Daniele Notarnicola, for the precious support given during the review of the paper.

The Covid-19 pandemic has accelerated some structural changes in the healthcare industry, and several health-tech start-ups thrived by providing innovative solutions to the challenges imposed by the pandemic. To finance their growth, many of these companies went through mergers with Special Purpose Acquisition Companies (SPACs). The paper investigates the market performance of healthcare-focused US-listed SPACs. The study aims to analyze the returns that healthcare SPACs offer to their investors and ascertain the determinants that drive these returns over a sample of 33 SPACs that merged with a healthcare firm between 2018 and 2021. Linear regression is employed to identify the drivers of SPACs’ market performance. Portfolio analysis is also performed and compared against the Russell 2000 and the S&P500 Healthcare Indexes.
The first outcome accomplished by the analysis is that a portfolio made of healthcare-SPACs underperforms small-cap firms by 2.14% and the healthcare industry by 6.72% over a two-year period, even if the difference in the returns of the healthcare SPACs portfolio and the two benchmarks is not statistically significant. Moreover, a high level of redemptions, the presence of serial SPAC sponsors, cross-border deals, private equity and venture capital funds as sellers, and a high percentage of boutique investment banks among the sell-side advisors seem to negatively affect the returns of healthcare-focused SPACs with a significance level of at least 10%. Instead, a larger number of buy-side advisors appears to be beneficial for healthcare-focused SPACs’ market performance.