SPACs, Private Equity, Venture Capital See Jump in Investor Capital

Investors continue to go gaga for special-purpose-acquisition companies, venture-capital and private-equity investments.

SPACs brought in about $12 billion of capital in both October and November, about double the figure of the three prior months, according to Dealogic data cited by The Wall Street Journal.

New SPACs are popping up to the tune of three a day this month.

Meanwhile, the levels of dry powder — the industry term for cash available for investment — hit $440 billion for venture capital funds and $310 billion for growth private equity funds this month, according to Preqin data cited by The Journal.

SPACs, or blank-check companies, are formed for the express purpose of finding and merging with an operating partner. The idea is to speed the operating company to the public markets and avoid the extended process of a traditional initial public offering.

Blackstone (BX) – Get Blackstone Inc. Report appears to represent the biggest diversified alternative asset manager that’s publicly traded.

Morningstar analyst Greggory Warren assigns the New York investment firm a narrow moat.

“Blackstone has built a solid position in the alternative asset-management industry,” he wrote in October.

It has used “its reputation, broad product portfolio, investment performance track record and cadre of dedicated professionals to not only raise massive amounts of capital but sustain the reputation it has built for itself as a go-to firm for institutional and high-net-worth investors looking for exposure to alternative assets.

“That said, … while we have confidence in the firm’s ability to earn excess returns over the next 10 years, we believe it will become increasingly difficult for the company to do so longer-term as increased competition from peers … , continued pressure on fees, and a general maturation of the segment (from a solid period of above average growth due to shifting investor demand for alternatives) weigh on results.”