A period of ultra-low interest rates, a still-robust equity market, and expected valuation opportunities caused by COVID-19 disruptions have combined to help drive IPOs sharply higher.

One of the largest blank-check company deals in the US is slated to go ahead, continuing interest in these entities that have become an important wealth management talking point, media reports said. 

MSP Recovery, which helps recover money from Medicare and Medicaid secondary payments, will go public through a deal with a special purpose acquisition company (SPAC) giving the combined company an enterprise value of $32.6 billion in the second biggest SPAC merger, Reuters reported July 12. The report said the deal with Lionheart Acquisition Corp II is expected to fetch $230 million in proceeds for MSP.

This story adds to a trend of SPACs being created, although the momentum in the market had decelerated a few weeks ago, with enthusiasm chilled by comments from the Securities and Exchange Commission, saying it was considering new rules for the space. The increase in SPAC activity has prompted some analysts to fret that the phenomenon was a bubble. Family Wealth Report has regularly tracked the sector and views of private banks and family offices. A period of ultra-low interest rates, a still-robust equity market, and expected valuation opportunities caused by COVID-19 disruptions have combined to help drive IPOs sharply higher.

MSP, led by billionaire entrepreneur John Ruiz, collects and analyzes data on the government-backed Medicare and Medicaid insurance claims, and then helps recover money owed to its clients, which include hospitals, health insurers and medical providers, the report said. 

At $32.6 billion, the merger is second in size only to the nearly $40 billion deal inked in April between Southeast Asia's Grab and Altimeter Growth Corp.

US initial public offerings – important liquidity events that wealth managers track – surged in the first half of 2021 reaching $171 billion, beating the 2020 record of $168 billion (source: Dealogic). SPACs have fueled some of this rise. SPACs are created with the purpose of merging with a private company within two years of the listing. 

The report noted that in recent months biotech company Ginkgo Bioworks and SoftBank-backed mortgage startup Better HoldCo have announced deals with SPACs.