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This paper analyzes the structure of SPACs and the costs built into their structure. It finds that costs built into the SPAC structure are subtle, opaque, and far higher than has been previously recognized. Although SPACs raise $10 per share from investors in their IPOs, by the time the median SPAC merges with a target, it holds just $6.67 in cash for each outstanding share. For a large majority of SPACs, post-merger share prices fall, and these price drops are highly correlated with the extent of dilution, or cash shortfall, in a SPAC. This implies that SPAC investors are bearing the cost of the dilution built into the SPAC structure, and in effect subsidizing the companies they bring public.

Special Purpose Acquisition Companies ("SPACs") played a critical role in U.S. capital market growth in 2020. There were 248 SPACs launched, raising an aggregate of $83 billion in proceeds. The beginning of 2021 witnessed an acceleration of SPAC activity. In January and February alone, roughly $60 billion was raised by 189 SPACs. This article discusses what a SPAC is, how to raise a SPAC, and how de-SPAC transactions work.

IOSCO published a report that describes how special purpose acquisition companies (SPACs) work and outlines the development of SPAC markets. It then describes the regulatory approaches taken to SPACs and shows how these differ from those adopted for traditional initial public offereings (IPOs). SPACs may have some advantages and disadvantages compared to traditional IPOs, but both result in the same outcome and share some key risks. Accordingly, their regulatory treatment may be expected to be similar. However, differences in their mechanics (mainly because the SPAC process for bringing a private company onto the public market takes place in two steps compared to the "one step" IPO) mean that the regulatory treatment of SPACs may need to be adapted appropriately, and the survey confirms that in many respects the treatment of SPACs is not identical to that of an IPO.

The U.K. Financial Conduct Authority (FCA) will be consulting on amendments to its Listing Rules and related guidance to strengthen protections for investors in Special Purpose Acquisition Companies (SPACs). The consultation will consider the structural features and enhanced disclosure, including a minimum market capitalisation and a redemption option for investors, required to provide appropriate investor protection. Our proposals will help to ensure that SPACs operate within a framework of high regulatory standards and oversight. Where such protections are in place, we consider that the existing presumption of suspension of the listing for such companies at the point of announcement of an acquisition target is no longer required and we therefore intend to consult on this basis, aligning this element of our rules more closely with other major jurisdictions. https://www.fca.org.uk/news/statements/future-consultation-strengthening-investor-protections-spacs

A special purpose acquisition company (SPAC) is a "blank check" shell corporation designed to take companies public without going through the traditional IPO process. Though SPACs have been around for decades, the financial maneuver has gained traction in recent months as more private companies eye exit opportunities and as the Covid-19 pandemic creates uncertainty in the IPO market. In fact, the number of SPAC IPOs in 2020 has already more than doubled compared to 2019 full-year totals.

The upsides to SPACs include speed (the typical IPO process can take 2-3 years from start to finish, while a SPAC only takes 3-4 months), additional profit opportunities (institutional investors can purchase additional shares at a discount through warrants) and significant upside for sponsors (who can stand to make hundreds of millions of dollars regardless of how well the acquired company does after it's public). There are also some significant downsides to the SPAC structure, including expenses for the target company, time constraints, and the risk to retail investors.

Some of the biggest players in finance, particularly hedge funds, are making a killing by investing in special-purpose acquisition companies (SPACs). Hedge funds give the SPAC money for up to two years while it looks for a merger target. In return, they get a unique right to withdraw their investment before a deal goes through that minimizes any loss on the trade. At the same time, the potential return for early investors is huge if the SPAC shares rise because they also initially receive shares and warrants giving them the right to buy more shares at a specified price in the future.

A SPAC is a shell company that a "sponsor" investor or group organizes and takes public in an initial public offering. Once public, the company has no operations. It simply holds cash-typically, $200 million to $400 million-and has two years to find a private company with which to merge and thereby bring public. The sponsor invests some of its own capital in the SPAC as well but takes an additional 20% interest in the SPAC at a nominal price.

While this guidance does not create any new obligations or modify existing disclosure obligations, it does summarize a number of Staff concerns that have been reflected in previous SEC comment letters. As SPAC sponsors are normally quite keen to have their registration statements reviewed as expeditiously as possible, SPAC sponsors will need to consider their proposed SPAC structures and registration statements in light of the new guidance.

The U.S. Securities and Exchange Commission (SEC) has reportedly opened an inquiry into "blank check" special purpose acquisition companies (SPACs). SPACs are listed shell companies that raise funds to acquire a private company with the purpose of taking it public, allowing such targets to sidestep a traditional initial public offering. The SEC letters asked the banks to provide the information voluntarily and, as such, did not rise to the level of a formal investigative demand. The SEC wanted information on SPAC deal fees, volumes, and what controls banks have in place to police the deals internally.

Singapore-based Grab Holdings, the ride-hailing, food-delivery and digital-wallet group that operates across much of Southeast Asia, will go public on the Nasdaq Stock Market by merging with a special-purpose acquisition company (SPAC) securing a $39.6 billion valuation. Grab will merge with Altimeter Growth Corp., a SPAC sponsored by California-based Altimeter Capital.

"Once the Rodney Dangerfield of the investment world, SPACs, or Special Purpose Acquisition Companies, have gotten plenty of respect as of late. These blank-check companies celebrated a banner year fundraising in 2020. But prior to that, they toiled in near obscurity. Nasdaq Chief Economist Phil Mackintosh offers this analysis on SPACs, looking at their trading characteristics, performance and other relevant data points."

Special Purpose Acquisition Companies (SPACs) are shell companies that raise capital in order to search for a private company that it will bring public in the future. Although SPACs have been growing over the past five years, last year they represented nearly 50% of all capital raised by operating companies, with more than $70 billion in proceeds raised. Because SPACs are typically smaller than operating companies, they accounted for more than half of all new listings in 2020.

Crypto platform Bakkt is set to merge with Special Purpose Acquisition Company (SPAC) VPC Impact Acquisition Holdings. A SPAC is a shell company whose only purpose is to buy or merge with another company and allow it to be listed on the stock markets without going through lengthy and expensive process of an initial public offering, or IPO. Bakkt is expected to be valued at $2.1 billion after completing the merger.

Blank-cheque companies have already surpassed last year's fundraising record in the first quarter of 2021, reflecting the insatiable appetite for special purpose acquisition companies both on Wall Street and main street. Spacs have raised $79.4bn globally since the start of the year, eclipsing the $79.3bn that flooded into vehicles in 2020, according to data provider Refinitiv, as of Tuesday night. So far in 2021, 264 new Spacs have been launched, overtaking last year's record 256.

A filing this week with the U.S. Securities and Exchange Commission seeks to create the FOMO ("fear of missing out") exchange-traded fund (ETF) that will invest in "securities that reflect current or emerging trends." The actively managed FOMO will target everything from stocks across both developed and emerging markets to Special Purpose Acquisition Companies (SPACs), other ETFs, derivatives, volatility products and both leveraged and inverse funds.

Grab is in talks to go public through a merger with a SPAC that could value the Southeast Asian ride-hailing startup at as much as $40 billion, making it by far the largest such deal on record.

The SPAC boom has attracted financiers, former politicians, athletes and celebrities willing to use their fame to attract retail and institutional investment. About 600 blank-check companies have raised more than $182 billion since the beginning of 2020, according to data compiled by Bloomberg. But family offices - the discrete, sometimes secretive firms that manage the affairs of the ultra-rich - have been one of the biggest driving forces.

"SPACs are also called "blank check companies" because at the time of their IPO they are only shell companies without assets and it is usually not known with which company a merger will eventually take place. As a result, the sponsor's reputation plays a crucial role: "sponsor picking" replaces "stock picking." The IPO prospectus usually contains information about the industry the sponsor is considering for a merger and information about the remuneration for the sponsor and their management team."

Online finance start-up SoFi is set to go public by merging with a blank-check company run by venture capital investor Chamath Palihapitiya. The merger with Palihapitiya's SPAC, Social Capital Hedosophia Corp V, will value SoFi at $8.65 billion.