The SPAC boom: using special purpose acquisition companies as an alternative means of listing in the us
This year has been a record-breaking year for special purpose acquisition companies (SPAC) initial public offerings (IPOs) in the United States of America (US). In Q3 2020, more than 80 SPACs have gone public, raising more than USD32 billion, eclipsing the aggregate gross proceeds of USD13.6 billion which were raised in 2019. SPACs listing have also reportedly outpaced traditional IPOs in July 2020 and August 2020. This banner year for SPACs also saw the largest ever SPAC listing to date by Pershing Square Tontine Holdings Ltd., a SPAC sponsored by funds managed by hedge fund billionaire Bill Ackman’s Pershing Square Capital Management L.P., which went public in July 2020 and raised USD4 billion. This year also saw the largest SPAC merger between Churchill Capital Corp. III and Multiplanfor USD11 billion.
This client update provides an overview of SPACs, the key phases in the lifespan of SPACs and the key participants in a typical SPAC listing. It also discusses the pros and cons of using a SPAC structure as well as how SPACs may potentially be of interest to Indian companies looking to list overseas and tap the public markets for funds.
