Research Blog Posts: November 2019
By Dr Danial Hemmings and Professor Aziz Jaafar Companies looking to list their shares on public stock exchanges used to have to conduct an Initial Public Offering (IPO) – not so now in the age of the ‘SPAC’. Special Purpose Acquisition Companies (SPACs) are listed shell companies, formed usually by private equity firms, who seek to use investors’ capital to acquire an unlisted company. The acquired company (i.e. the ‘target’) inherits the SPAC’s listed status without having to conduct an IPO. Crucially, the target company is undetermined at the time the SPAC is created – therefore investors will have no idea in which company they are eventually investing in! If they don’t agree with the proposed deal, however, they can as shareholders vote to reject it, and have their investment returned.
Publication date: 25 November 2019