Special Purpose Acquisition Companies (SPACs) are a convenient way of raising finance for a specific purpose, most usually the acquisition of a third party company. Listing a SPAC on London Stock Exchange is a straightforward step by step process, beginning with an Initial Public Offering (IPO), that allows sponsors to attract a wide range of potential investors interested in generating returns through the acquisition of an attractive company or other asset.
The sponsor uses their network and industry knowledge to source a target for acquisition:
The company uses proceeds, raises debt and issues equity to fund acquisition of a selected target:
The company 'de-SPACs' and becomes a normal operating company.
Liquidation occurs if the business combination is not executed within the agreed timeline: