The Special Purpose Acquisition Corporation (“SPAC”) is a publicly traded vehicle designed to enable large private companies with meaningful growth potential, or a combination of smaller private growth companies, to access capital and go public with substantially reduced risks.
Investors in a SPAC are provided with the opportunity to invest in an experienced management team seeking to acquire or merge with high-potential growth companies, while benefitting from robust investor protection mechanisms.
Other similar listed vehicles have not been designed to address the large growth company opportunity and, in the case of a Capital Pool Company ("CPC"), may expose investors to significant risks.
The structure and features of the SPAC embody a rigorous review process and enhanced investor protection that ultimately lead to quality transactions. Also critical to the success of a SPAC is its listing strategy. Benefitting from the experience of a number of SPAC listings, Cboe Canada provides SPAC issuers with insights and recommendations regarding their strategy at the time of listing and at the time of the qualifying transaction (“QT”).
SPAC Key Features
- A minimum IPO of at least $30,000,000, at least 90% of which must be held in escrow
- Founders’ equity ownership in the SPAC of not more than 20% immediately following the closing of the IPO excluding any securities purchased at or prior to the closing of the IPO at not less than the IPO price
- A QT to be completed within 36 months
- The QT resulting issuer must meet initial listing standards for the NEO Exchange
- A prospectus in connection with the SPAC IPO and QT
- A redemption feature for the IPO investors at the time of the QT
- The QT is not subject to shareholder approval if 100% of the funds resulting from the IPO are held in escrow
- In the event the SPAC fails to complete a QT within the permitted time, the escrowed funds will be returned to the investors on a pro rata basis