'SPAC King' Palihapitiya makes a comeback with new blank-check IPO

By Manya Saini

(Reuters) -Chamath Palihapitiya, dubbed Wall Street's "SPAC king" for his high-profile blank-check deals, is set to take his latest special purpose acquisition vehicle public, marking his return to the market after several years.

American Exceptionalism Acquisition Corp, chaired by the venture investor who became the face of the original SPAC mania, is looking to raise up to $250 million in an initial public offering, a filing showed late on Monday.

"I believe the biggest gains in the future will come from companies that are involved in fixing the fundamental risks that come from our interconnected global order while reinforcing American exceptionalism," Palihapitiya wrote in a letter to investors.

A SPAC is a shell firm that raises money through an IPO to merge with a private business and take it public, offering companies an alternative route to the market that bypasses the longer and more costly traditional IPO process.

American Exceptionalism will target companies in AI, energy, decentralized finance, and defense - the sectors currently attracting the largest shares of venture funding.

The broader SPAC market has experienced renewed momentum in recent months. In August alone, 17 blank-check companies have filed for IPOs, surpassing July’s total of 12, according to SPAC Research.

Separately on Tuesday, Betsy Cohen, another industry veteran, filed for a new blank-check company targeting a merger with a bitcoin-focused crypto startup.

Under Brandon Lutnick - the son of U.S. Commerce Secretary Howard Lutnick - financial services giant Cantor Fitzgerald has also leaned on such deals this year.

SPAC mergers hit record levels in 2020 and 2021, with several Wall Street heavyweights - including billionaire investors Bill Ackman and Michael Klein - betting on them as the next big trend in listings.

However, activity slowed sharply in subsequent years as regulatory scrutiny increased and investors soured on the once-popular vehicle.

Many SPACs failed to secure targets, while others completed deals with heavy redemptions or saw shares plunge after debut.

(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel)

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