The growth of so-called “blank cheque companies”, or special purpose acquisition companies (SPACs), has been one of the most eye-catching — and controversial — features of equity markets in recent years. It led to lurid headlines about alleged fraud and reported losses of $4.8bn among retail investors between early 2020 and April 2022. While they boomed during this period, activity has since dropped off as markets have cooled and scepticism about the structures has grown.
SPACs are investment companies that have no specific business operations but go public via an initial public offering (IPO) with the expressed aim of merging with private firms to take those businesses public, a process known as a “de-SPACing”.
