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Reuters reports that time is running out for the dozens of Special Purpose Acquisitions Companies (SPACs) that raised billions in IPOs nearly two years ago. The companies are usually obligated to consummate an acquisition within two years of the IPO or shareholders get their money back.

SPACS are caught between a dead IPO market and cash-hoarding hedge funds. While the credit crisis has cleared away competitors for prime acquisition targets, investors have blocked acquisitions by voting down one deal after another.

By the count of one banker, Benjamin Howe, chief executive of Boston-based boutique investment firm America's Growth Capital, 21 acquisition proposals were nixed by shareholders in 2008, while nine were given the OK. Of those, only two were approved in the second half of the year.

"In theory, it appears to be a perfect storm for SPACs," Gil Ottensoser, managing director at Deutsche Bank (NYSE:DB), said, referring to abundant bargains.

"In reality, part of the challenge is that there is no IPO market, and public valuations in this environment can never be low enough," he said.

Cash-hungry hedge funds are also conspiring against SPAC success:

The SPACs' cash holdings give them an edge but could also be a double-edged sword as their cash-strapped investors, primarily hedge funds contending with unprecedented levels of redemptions by investors in 2008, want to recoup some cash.

"There are about 30 hedge funds that control the SPAC market, and they've been clobbered by the markets," said America's Growth Capital's Howe. The S&P 500 fell about 40 percent in 2008.

So is there hope for SPACs?

"When the IPO calendar comes back, and the buy side's appetite for risk returns, it's logical to believe that SPACs will be able to consummate good acquisitions as well," Ottensoser said.