Chart of the Week: March 30, 2026: SPACs are back!

Observations: 

• Special Purpose Acquisition Companies (SPACs) have staged a remarkable comeback. After the speculative frenzy of 2020–2021 and the painful contraction that followed (refer to Sustainable Investing with SPACs published almost five years ago to the day), 144 SPAC IPOs came to market in 2025. This is the highest annual count from the peak, raising over $30 billion in aggregate. Since the start of the year to-date, 61 additional SPACs filed for IPOs.

• Based on public filings, 11 sustainable thematic-oriented SPACs were identified that collectively raised over $1.5 billion in confirmed closes through the end of 2025. Refer to the table below. The dominant theme is nuclear energy, which accounts for roughly half the sustainability cohort, followed by SPACs targeting sectors that include renewable energy and energy transition, climate transition and decarbonization as well as agribusiness, water, and food technology. That said, of the 11 SPACs, only Global Terra discloses ESG as a formal, explicit evaluation criterion that will materially influence deal selection. Invest Green and Spring Valley III reference ESG contextually while the remaining eight treat sustainability as a sectoral or thematic thesis. This matters because it means most of these vehicles carry no binding commitment to any sustainable principles or practices and no mechanism for holding a target company to ESG standards post-merger. Yet, nuclear energy development and implementation, for example, are exposed to risks in the form of radioactive waste disposal, high water consumption and community impact and push back, to mention just a few, that may not otherwise be accounted for. Another example is renewal energy projects, such as the installation of solar panels that rely on rare minerals (silver, indium, tellurium) and energy-intensive processes, often in carbon-heavy supply chains, end-of-life panel disposal, or land use conflict with local communities.

• More broadly, the resurgence of SPACs raises a familiar question for investors: do the opportunities justify the risks of investing in SPACs?

• According to Investopedia, a special purpose acquisition company is a company formed to raise money through an initial public offering so it can later purchase or merge with an existing company. Special purpose acquisition companies (SPACs) have no commercial operations. They are formed strictly to raise capital through an initial public offering (IPO) that they can then use to acquire or merge with another company.

• SPACs offer genuine advantages that traditional IPOs cannot. Because the merger process allows target companies to share forward-looking financial projections, something heavily restricted in conventional offerings, sectors with long development timelines, such as nuclear energy, advanced manufacturing, and climate technology, can tell a more complete story to investors. This structural flexibility is precisely why several small modular reactor developers, fusion energy companies, and clean energy vehicles have chosen the SPAC route in 2025 rather than a traditional listing.

• For investors with a thematic or sustainability mandate, SPACs can provide early-stage access to companies that would otherwise remain private for years. They also carry a built-in risk management feature: the redemption right, which allows investors to reclaim their capital at the trust value if they dislike the announced merger target, effectively providing downside protection during the search phase.
• Yet the structural risks that caused widespread losses in 2022 and 2023 have not disappeared. Post-merger performance across de-SPAC transactions has historically been weak — the vast majority of companies that went public via SPAC during the 2021 boom have traded well below their listing prices. Sponsors typically retain a 20% equity stake upon deal completion, a dilution that effectively penalizes ordinary shareholders from day one.

• The search-phase pressure is also real. SPACs have a fixed window, typically 18 to 24 months, to complete a merger or return capital. This clock can incentivize sponsors to pursue transactions that are less than ideal, particularly in niche sectors where the pool of suitable targets is limited.

• Regulatory scrutiny has intensified too. The SEC’s 2024 SPAC rules eliminated the safe harbor that once shielded forward-looking projections from liability, bringing disclosure standards closer to those of traditional IPOs.

• For investors drawn to emerging sectors, particularly the clean energy and nuclear themes prominent in 2025, SPACs remain a viable but demanding vehicle. Success depends heavily on sponsor quality, deal discipline, and the underlying strength of the target business. Thematic excitement, however compelling, is not a substitute for rigorous due diligence.