Why CFOs should prepare for high SPAC redemptions

Larry Swets Jr. was pleased when nearly 88% of Pelican Acquisition stockholders opted to redeem their shares in March ahead of the SPAC’s merger with Greenland Energy Co., a Denver-based oil and gas exploration company. Swets, who is Greenland’s executive chairman, thought more Pelican shareholders might’ve cashed out.

“I was happy to have not had 99% redemptions,” Swets told CFO Brew.

Roughly 10% or 12% of Pelican shareholders chose to stay with the deal, and later that month, Pelican Acquisition completed its merger with Greenland Energy, an oil and gas exploration company, and March GL Co, which had inked a deal with 80 Mile to start drilling at Jameson oil and gas basin in Greenland.

SPAC redemptions exceeded 90% in 2023 and 2024, and then dropped to just over 80% during the first half of 2026, according to investment bank Houlihan Capital.

Swets is also head of SPACs at FG Merchant Partners, an affiliate of Fundamental Global, has been involved with blank check companies—development stage companies with no business operations; he says he’s taken part in SPACs for 20 years, usually as a sponsor. He noted that he’s seen SPACs with redemptions as high as 99%, some as low as 10% and “everything in between.”

“We tell people from Day 1 [to] expect 100% redemption, unless we can drive some attention with shareholders,” Swets said.

SPACs have changed since a record number of blank-check companies went public in 2021. Due to high redemptions, SPAC IPOs are no longer a major financing event but are now “just listing mechanisms,” according to Mike Bellin, PwC’s US IPO and capital markets advisory leader. (Remember, the original purpose of a SPAC is to raise money to buy a business or assets, post-IPO.)

Anchor investors, including hedge funds, family offices, and sometimes private equity firms, commit to buy units before the SPAC IPO, Bellin said. Once the SPAC IPO closes, any money raised goes into a trust or escrow account, where it sits earning interest. (The trust is usually invested in safe, short-term instruments like treasury bills.) Shareholders have the option to redeem their shares once a merger target is identified, however, so the total dollar amount in the trust can drop.

A high redemption rate doesn’t mean the SPAC has failed, Bellin said. Instead, it typically points to a strategy by certain investors, who park their cash in SPACs to gain the interest that comes from trust accounts. “Elevated redemptions are a structural feature of today’s market, not a verdict on a given deal,” Bellin said.

Many of the investors who buy SPACs are often hedge funds whose only goal is to redeem, according to Swets. “They have no desire other than that. They’ll give you lip service that they are interested in the fundamental story—‘if you bring us a great deal….’ You know the chances of that happening are very low,” he said.

CFOs considering a SPAC merger should evaluate financing options like issuing preferred shares, raising debt, or even a private investment in public entity (PIPE), where the SPAC raises capital from private investors for its merger, Bellin said. Blank-check mergers can feature a PIPE, and it is one of the more critical aspects of any SPAC merger transaction, Bellin said. The PIPE is “very important because you cannot necessarily bank on the cash in the SPAC because that is redeemable,” he said.

Pelican’s high redemptions meant a big chunk of the nearly $86.25 million it had raised from its May 2025 IPO was gone, and the PIPE market in April “wasn’t friendly,” Swets said.

Greenland Energy opted to collect $70 million through a public offering. Greenland has used the money to buy assets and prepare for drilling, Swets said. Greenland Energy is in talks to merge with 80 Mile, which has the licenses to drill in Jameson Land Basin in East Greenland. “We are getting a permit under [the 80 Mile] license to drill, and we expect to do that next winter,” Swets said. (In 2021, Greenland, a self-governing island that is part of Denmark, banned new oil and gas exploration, CBS News reported. But older licenses, like the one held by 80 Mile, are exempt, according to Arctic Today.)

The goal of a SPAC shouldn’t be the trust money, Swets said. Instead, CFOs considering a SPAC merger should do it “so you can get a public listing,” he said.

“Don’t go into [a SPAC] with an expectation that you’ll keep the trust,” Swets added.