Can a SPAC Recap a BDC?
BDCs (business development companies) need money. SPACs (special purpose acquisition vehicles) have money they need to deploy. BDC, meet SPAC. It sounds like alphabet soup, but several SPACs and BDCs are discussing transactions, according to Michael Tew of research firm SPAC Partners. And it does seem to make sense. BDCs, which provide financing to middle and lower middle market companies, use their balance sheets to maintain strict leverage ratios, which means that they really could use some liquidity. Moreover, BDC share prices have plummeted in recent months, at the very time when their product is in high demand. Enter the SPACs. They have money. According to Tew, there are around 40 SPACs with about $9 billion in equity that have yet to announce a deal. Since many of them will meet their "invest or fold" deadlines within the next 12 months, they’re scrambling to find suitable targets and fighting for the same deals.
