Blank-check company backed by Cerberus affiliate downsizes IPO

(Reuters) – A blank-check company backed by private equity firm Cerberus Capital Management downsized its initial public offering on Monday, a sign the SPAC frenzy that has gripped U.S. markets in recent months is nearing a saturation point.

Cerberus Telecom Acquisition Corp is now looking to raise $300 million, selling 30 million shares at $10 apiece, its regulatory filing showed.

Earlier, the company had aimed to sell 40 million shares at $10 apiece.

The special purpose acquisition company (SPAC) is being backed by Cerberus Telecom Acquisition Holdings LLC, an affiliate of Cerberus Capital.

A blank-check firm, also known as a SPAC, uses IPO proceeds to buy another company, in a deal that takes the other company public.

The year has seen many companies prefer the SPAC route to public markets over a traditional IPO. Earlier on Monday, payment services provider Billtrust also said it would go public through such a merger with a blank-check company.

SPACs have so far raised $55 billion through IPOs in 2020, by far the largest haul on record and more than the prior five years combined, according to SPAC Research.

However, SPACs like Spartacus Acquisition Corp TMTSU.O and ArcLight Clean Transition Corp ACTCU.O also had to downsize their IPOs earlier this year, indicating there is a limit to the amount of capital investors have to back new SPACs.

Morgan Stanley and Deutsche Bank Securities are the underwriters for the Cerberus offering.

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