Time for SPACs to return

SPACs have become a more efficient way to get a private company listed into the public space due the ease of process. Instead of going through the normal IPO process, whereby it may even take a year or more, a listing via SPAC is much easier as it only involves the regulatory and shareholders’ approval.

A SPECIAL purpose acquisition company (SPAC) is defined as a company that raises capital via initial public offerings (IPOs) with the hope that it will find a business to be injected into the listed entity within a defined period of its post-listing exercise, typically within three years.

Based on data provided by spacresearch.com, the year 2020 has been a stellar year for SPACs as we have seen some 237 SPAC listings in the US alone worth some US$80.1bil, more than five-folds the 59 offerings worth some US$13.5bil raised last year. The average offering per SPAC listing too has risen significantly with an average size of US$338mil from US$230.5mil in 2019, up more than 46%.