Big SPAC Deals Don’t Need Big SPACs

One thing about the biggest SPAC deal ever is that it doesn’t involve a particularly big SPAC. Grab Holdings Inc., the Southeast Asian tech unicorn, is merging with Altimeter Growth Corp., a U.S.-listed special purpose acquisition company. The deal gives Grab about a $40 billion equity value, and Grab will raise $4.5 billion. That is sort of in the normal zone for companies going public: In a typical initial public offering, a company might sell 10% to 20% of itself to new investors; here the number is about 11%.

But the SPAC itself — Altimeter Growth — is only a $500 million pot of money. That’s a big pot of money, but not all that big in the context of the modern SPAC boom; the record is Bill Ackman’s $4 billion SPAC. Altimeter’s $500 million SPAC will buy just 1.3% of the public company.1 The remaining $4 billion will come from other big investors — including the sponsor of the SPAC — who will invest alongside the SPAC in a PIPE, a private investment in public equity. From the press release: