What is SPAC? It means Special Purpose Acquisition Company. In another word, a Blank Check Company. A company whose shares are listed and traded over a stock exchange without doing any business or with no firm business plan.
Some thirty-five or forty years ago, establishing an investment holding company was popular in Hong Kong, Malaysia, and Singapore. The investment holding company is used as a vehicle to go public listing and at the same time, carries out an IPO to raise capital for its subsidiary companies. The accounting principle of UK SAAP applied to consolidate the assets and liabilities of the subsidiary companies into the financial statements of the investment holding company being the parent company.
Today, in the United States of America, there was an increasing number of SPACs incorporated, listed on the NYSE and Nasdaq stock exchange with the number of IPOs completed. Billions of dollars were raised for mergers and acquisitions. The U.S. Securities and Exchange Commission issued and published the CF Disclosure Guidance: Topic No. 11 dated December 22, 2020, which helped SPACs to have access to the U.S. capital market.
SPAC first started in 2009, the first SPAC was Virgin Galatic Holdings (NYSE: SPCE).
According to the survey titled: Number of SPAC IPOs in the U.S. 2009-2021 dated May 7, 2021, by Jennifer Rudden, there were 248 SPACs, and as of April 2021, a record 313 SPAC/IPOs. It appears time to take a SPAC to go public is shorter and faster in comparison to a traditional Form S-1 filing.
SPAC revolutionized the concept of an investment holding company with the ability to raise substantial capital through an IPO. It expands the venture capital and investment approach. A door opens for those who in need of capital for business. SPAC, a revolutionized vehicle, a player in this modernized capital market.
Authorities in Singapore and the EU are fast to consider SPAC for public listing and IPO.