In recent years, in addition to “Buy & Build,” SPACs have been on the rise, particularly in the United States. SPACs are companies that use a stock market listing to raise capital to use it to acquire or merge existing companies. So it is a special purpose acquisition company. Literally, SPAC also stands for Special Purpose Aqcuisition Company.
Thus, the SPAC is a shell company listed on a stock exchange for the purpose of acquiring an unlisted company and thus taking it public. The traditional IPO process does not then have to be gone through. Investors do not invest in a company with business activities at that time. It is purely a shell company with an acquisition cash. So an investor actually gives blind money to the management behind the SPAC, which agrees to find an acquisition candidate.
SPAC is then given up to two years to find such an acquisition partner. If it fails, the bag of money is returned to the investors. Interesting, because the SPAC must therefore take over to be successful. A recent Dutch example is the Amsterdam-listed European Fintech Ipo Company. This SPAC focuses on fintechs and is led by Martin Blessing, the former top executive of Germany’s Commerzbank. But an American SPAC can also acquire a Dutch company.
SPACs particularly focus on electric cars, biotech companies and fintechs.
