Special purpose acquisition companies were a big catalyst in pushing the stock market to record highs in 2020 and early 2021. However, the SPAC boom has slowed down considerably in recent months, even though stock market benchmarks have continued to move broadly higher since then. At 12:30 p.m. EDT, the Dow Jones Industrial Average (^DJI -0.22%) was down 146 points to 33,600, but the S&P 500 (^GSPC -0.04%) had gained 6 points to 4,134, and the Nasdaq Composite (^IXIC -0.24%) had managed to rise 80 points to 13,930.

Even on a mixed market day, there was a lot of excitement in the SPAC community about a massive merger that would involve the biggest private company yet to use the method of going public. Even though shares of the SPAC involved were broadly lower on the news, deals of this size prove that there's still demand from privately held businesses to use special purpose acquisition companies to raise capital.

Letter blocks spelling SPAC with dollar bills surrounding them.

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The biggest SPAC deal yet

Shares of the SPAC Altimeter Growth (AGCU.U) were down 4% on Tuesday morning. The shell company announced a massive deal that will help bring an innovative business in Southeast Asia public for the first time.

Altimeter Growth agreed to merge with Grab Holdings, a Singapore-based ride-hailing and food-delivery provider. The merger terms put a price tag of nearly $40 billion on the start-up, which would make it the biggest SPAC deal yet.

SPAC investors will get only a tiny part of the company. Altimeter raised just $500 million in its initial SPAC offering, and it lined up more than $4 billion in private investment in public equity financing to consummate the deal. Altimeter's sponsor, Altimeter Capital Management, was a major investor in the PIPE (private investment in public equity) financing as well, and it agreed to a three-year lockup period for the shares it will receive as a result.

Grab's goals are more ambitious than its current business suggests. Eventually the company wants to handle a full range of needs for users, going beyond mobility and deliveries to include financial services and other things of value to both consumers and entrepreneurs.

No joy elsewhere in SPAC-land

Yet even with the success of Altimeter in landing a whale of a merger candidate, SPAC investors seem unconvinced that it's truly a turning point in the market environment. Major players in the SPAC realm didn't see any big moves. Pershing Square Tontine Holdings (PSTH) was up just a tiny fraction of a percent. Chamath Palihapitiya-led Social Capital Hedosophia Holdings IV (IPOD) and Social Capital Hedosophia Holdings VI (IPOF) were both down as much as 1%.

Part of the problem is that even SPACs that have consummated their mergers haven't all lived up to investor expectations. Highly successful SPACs like Opendoor Technologies (OPEN -2.09%) and Virgin Galactic Holdings (SPCE -5.62%) have lost half or more of their value from highs set just a couple of months ago. The experience has been a sobering one for investors in these businesses who had the unfortunate timing to buy at elevated levels.

Deals like Grab Holdings could bring SPACs back into the good graces of investors. For now, though, shell company investors seem to need further convincing before they'll get all their confidence back.