Citigroup
Pulled back from SPACs in 2022
Fees Earned
$1.8B
SPACs Underwritten
120
Bankrupt SPACs
5
Bankruptcy Rate
4.2%
Overview
Citigroup was the single largest underwriter of SPACs by volume during the 2020-2021 boom, earning an estimated $1.8 billion in fees. The bank underwrote more SPAC IPOs than any other institution, including many that later went bankrupt or lost investors 90%+ of their money. Citi pulled back aggressively in 2022, citing regulatory concerns, but had already collected its fees — demonstrating the perverse incentives in the SPAC underwriting model.
Average Client Return
Average return for investors who held SPAC-merged companies underwritten by Citigroup. The bank collected its fees at IPO regardless of subsequent performance.
Notable Deals
The Fee Structure Problem
SPAC underwriters like Citigroup typically earned 2% of the IPO proceeds upfront, with an additional 3.5% deferred fee paid at deal completion. On 120 SPAC IPOs, this generated approximately $1.8B in fees.
Crucially, these fees were earned regardless of whether the SPAC found a good target or whether investors made money. The deferred fee was paid from the trust at merger completion — meaning the bank had every incentive to push mergers through, even with subpar targets.