Gurley argues SPAC sponsors are capturing allocation power from Goldman and Morgan Stanley.
“Well, if someone gets to do that, the SPAC sponsors are saying, Hey Goldman, Hey Morgan, you don't get to allocate that money to your friends. I'm gonna allocate it to mine.”
Gurley argues SPAC craze exists because traditional IPO route allocates $200 million to bankers' friends.
“I think is the SPAC craze because you've created this massive pricing umbrella arbitrage to get a company public where the traditional route means someone gets to allocate $200,000,000 to their buddies.”
Gurley explains SPACs emerged as sponsors arbitraging the $200 million allocation that banks give their friends.
“Well, if someone gets to do that, the SPAC sponsors are saying, Hey Goldman, Hey Morgan, you don't get to allocate that money to your friends.”
Gurley says direct listings with primary offerings are now clearly superior to both IPOs and SPACs.
“Today's a super important day because I think it'll be very hard for anyone to argue whether it's a traditional IPO or a SPAC that that's gonna be better than a direct listing with a primary offering.”
Gurley argues SPAC market emerged because traditional IPO underpricing was worsening.
“I think one of the big reasons the SPAC market opened up was because the underpricing was getting worse and worse and worse.”
Gurley says people who participated in the $30 billion IPO giveaway are fighting SPACs and direct listings.
“So there's a whole bunch of people, many of who might be watching on this call, who participated in the $30,000,000,000 of giveaway last year,”
Gurley claims people who benefited from $30 billion in IPO underpricing are fighting regulatory changes.
“There will be people that will fight it from a regulatory standpoint. And quite frankly, Brad, they're fighting the SPACs from a regulatory standpoint.”
Gurley argues SPACs are only viable because broken IPO process makes direct listings look expensive by comparison.
“But, you know, it appears to me that the thing is gonna, is either gonna slow down or they're gonna step in and do those types of changes you're talking about.”