What ARE SPACS?
Updated: Feb 21, 2021
Last year, SPACs raised over $78.2 billion across 244 IPOs. SPACs this year are projected to beat those numbers with high expectations. SPACs have been around for a while now but have not had much attention until last year. For those of you who do not know what SPACs are, here is a quick summary. Special purpose acquisition companies are made to raise capital through an IPO and acquire a private company to take them public. SPACs are blank check companies, which means they have “no specific business plan or purpose or has indicated its business plan is to engage in a merger or acquisition with an unidentified company or companies, other entity, or person.” (Investor.gov). SPACs are gaining tremendous attention because they can significantly increase the sale price of the private company. SPACs also eliminate the traditional IPO process that private companies would normally have to go through. One of the most recent SPAC deals was between Northern Star Investment Group and Apex Clearing Corp. According to Bloomberg, “A merger would value Apex and Northern Star Investment Corp. II at as much as $5 billion.” As 2021 progresses, expect to see more and more companies to go public through SPACs.
https://www.nasdaq.com/solutions/spac (pic and info)