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What is a Special Purpose Acquisition Company?

What is a SPAC? (Special Purpose Acquisition Company)

There is a lot of momentum around the Special Purpose Acquisition Company (SPAC) model. More than $40 billion has been raised through over 130 SPAC’s so far in 2021. This is nearly half of the record $83 billion raised by 248 SPACs in 2020.

A SPAC is formed to raise money through an initial public offering to buy another company.

At the time when the IPO starts, there is no business behind the SPAC. Sponsors and Investors commit capital to provide a blank check, with the idea that the Sponsor will use their experience in a particular industry or business sector to close deals by investing in existing operating businesses in their area of expertise.

Money from the IPO goes to a trust account and is available to close an acquisition or liquidate SPAC.  SPAC’s have two years to close a deal or they must return their capital to investors.

Once a SPAC is listed you can trade at Tradeview, for example HYLN Hyllion acquired Tortoise acquisition corp SHLL

Feb 2. HYLN at $ 17.12

Feb 13 at $ 18.90