SPAC

Special purpose vehicles - acquisitions.

Abbreviation for Special Purpose Acquisition Company.

SPACs are companies formed to:

(1) Raise money from investors, and then

(2) Use the money raised to acquire another operating business.

SPACs may not be appropriate for all investors - ESMA

"SPACs are shell companies that are admitted to trading on a trading venue with the intention to acquire a business and are often referred to as blank check companies.

The persons responsible for setting up SPACs are the sponsors, who typically have significant expertise in one or more economic sectors and use the SPAC to acquire companies in those sectors.

SPACs sell their shares, often together with warrants, to investors to finance the acquisition.

After the acquisition, the SPAC becomes a normal listed company...

ESMA’s view [is] that SPAC transactions may not be appropriate investments for all investors due to risks relating to dilution, conflicts of interests in relation to sponsors’ incentives and the uncertainty as to the identification and evaluation of the target company.

In addition, ESMA emphasises the importance of the proper application of the MiFID II product governance rules and their role in ensuring investor protection."

Disclosure & investor protection guidance on SPACs - ESMA - July 2021

See also

• Acquisition
• Cash shell
• Company
• Conduit
• Conflict of interest
• De-SPAC
• Dilution
• Disclosure
• Entity
• European Securities and Markets Authority (ESMA)
• Financial Conduct Authority (FCA)
• Investor
• Listing Rules
• MiFID II
• Operating company
• Prospectus Regulation
• Reverse takeover
• Special Purpose Entity
• Special purpose vehicle
• Sponsor
• SSPE

External links

• Changes to Listing Rules applying to SPACs - FCA - July 2021
• Disclosure & investor protection guidance on SPACs - ESMA - July 2021