Merging with a SPAC enables a company to go public and raise capital more quickly and painlessly than with a traditional IPO, circumventing some of the volatility that Covid-19 caused on global markets. While they are far from a novel phenomenon, SPACs have become a hot button topic in recent times: SPAC initial offerings quadrupled last year, with the vehicles raising a record $80bn.
A key feature of SPACs is that they are often headed by big-name business executives or fund managers, who trade on past successes to inspire trust in investors.
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This is why SPACs are often referred to as “blank cheque companies”: they give the founders a free rein to back their choice of private company. Their sole function is to acquire a private company, enabling it to go public without having to go through a traditional initial public offering (IPO).Ī SPAC does nothing beyond its essential function – it neither produces nor sells anything, and a SPAC’s only assets are the funds raised from its own IPO.Ĭrucially, people who buy into a SPAC do not know what its eventual acquisition target or targets will be. SPACs are shell companies set up by investors and then listed on a given stock exchange. In parallel to this, several exchanges in the region are moving to allow SPAC listings, with a view to boosting post-coronavirus growth. South-east Asia is seeing a wave of interest in special purpose acquisition companies, or SPACs, with various major tech players considering them as a means to fast-track public listings. – Several South-east Asian tech unicorns may use SPACs to list publicly – Both Singapore’s and Indonesia’s exchanges are set to allow SPACs
– The vehicle is widely used to help tech start-ups go public – SPACs have become a hot-button topic in global finance
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