[SPACs in Crisis] ① "Unable to Merge Even After Three Years"... SPAC Market Driven Toward Liquidation

SPAC Market Shaken by Preference for Direct Listings

Speculative Trading on the Rise, Fewer Successful Mergers

"Urgent Need to Restore SPACs as a Channel for Listing Innovative Companies"

Editor's NoteSpecial Purpose Acquisition Companies (SPACs) once drew attention as a new listing route for unlisted companies and as a complement for venture investment exits. Recently, however, concerns about market contraction are mounting amid a surge in failed mergers and delistings. On the other hand, some market participants argue that SPACs still serve as a viable listing channel for small and mid-sized growth companies. The Asia Business Daily examines, in a three-part series, the current state of the SPAC market, the structure of the VC exit market, and the challenges of regulatory reform needed to balance investor protection with market revitalization.

"When the SPAC (Special Purpose Acquisition Company) system was first introduced, the review process was much simpler than for direct listings, but now there's almost no difference."

This is a quote from the head of a mid-sized domestic venture capital (VC) firm who considered, but ultimately withdrew from, a SPAC founder investment (participating as the largest shareholder at the establishment stage) this year. SPACs are shell companies that go public with the primary objective of acquiring or merging with unlisted companies. If they fail to find a merger target within three years, they must undergo liquidation procedures.

He stated, "In the past, SPACs were considered an alternative to direct listings, but now there is little reason to choose them," adding, "With the stock market also performing well, there is a perception that companies cannot secure proper valuations compared to direct listings. Existing SPAC shareholders also expect a certain level of profit, making negotiations over merger ratios and company valuations much more challenging."

The SPAC Market Wavers as Preference Shifts to Direct Listings

A warning light is flashing for the SPAC market, which was once in the spotlight as an alternative listing pathway for unlisted companies and a complement to the venture investment exit market. While the success rate of mergers has plummeted and cases of delisting are rapidly increasing, speculative trading aimed at short-term price swings is actually on the rise.

According to the "Korea SPAC Market Investment White Paper" published by the Financial Supervisory Service in March 2026, the SPAC merger success rate in 2025 was 38.5%, nearly a 30 percentage point drop from the previous year's 68.0%. Conversely, there were 24 cases of SPACs delisted due to failed mergers, a threefold increase from 8 cases the previous year. In particular, the number of SPACs that have failed to find a merger target for an extended period has risen quickly. As of the end of 2025, among 78 SPACs searching for merger targets, 14 had passed 27 months since listing.

These concerns are becoming reality this year. If a SPAC fails to submit a preliminary review application for a merger listing at least six months before the merger deadline, it is designated as an issue management stock. In May, Korea No. 13 SPAC, and in June, IBKS No. 23 SPAC, were both added to this list. From the beginning of this year through this month, 17 SPACs have been delisted due to failed mergers, up from 12 in the same period last year. In contrast, only 4 SPACs have successfully merged so far this year, half the number from the same period last year (8). It is clear that more SPACs, pressed by merger deadlines, are being driven to liquidation.

The market believes that SPACs are now far less competitive than in the past. Previously, they were perceived as a relatively fast and flexible route to listing compared to a typical IPO, but now the level of scrutiny by the stock exchange is said to be virtually the same. According to Heungkuk Securities, from 2020 through April this year, the average review approval period for SPAC merger listings was 110 days, which is not significantly different from the average of 117 days for standard KOSDAQ IPOs. Since the review period for technology-based special listings is relatively longer for new KOSDAQ listings, it can even be interpreted that the approval process for SPAC merger listings without special status is actually more stringent.

The number of new SPAC listings is also declining. Last year, 25 new SPACs were listed, nearly half the 45 listed in 2022. The share of SPACs in the overall IPO market is also trending downward.

Speculative Trading Expands... Merger Prospects Decline

Short-term, supply-demand-driven trading is increasing. The Financial Supervisory Service analyzed that SPAC share prices have repeatedly soared to more than double the offering price (2,000 won) on the first day of listing. Last year, the average intraday high price for SPACs on their listing day was 4,067 won, reaching 203% of the offering price.

In reality, post-merger performance has been poor. According to the Financial Supervisory Service, the 14 SPACs that successfully merged last year saw their share prices drop by an average of 26.6% nine months after listing, and the losses tended to widen over time. This year’s situation is similar. For example, KP Aviation Industry, which listed last month, plunged 60-70% from its reference price in just over a month. All five companies that listed on KOSDAQ via SPAC mergers this year are trading below their listing reference prices.

This content was produced with the assistance of AI translation services.