What is a Blank Check Company or a SPAC?

The Wall Street Journal Friday, July 10, BI ” ‘Blank Check’ IPO Brings Ackman Bank on Stage.  Looks like Pershing Square’s Bill Ackman is coming out with a SPAC.

  • Special purpose acquisition corporations (SPACs) are newly formed public companies with a mandate to acquire or merge with an operating company within a prescribed time-frame (usually 24 months from the IPO). SPACs raised $13.6 billion in 59 IPOs in 2019 and around 70 are actively seeking targets. Many of the acquisitions have been structured as reverse mergers where the seller receives cash and stock from the SPAC. The SPAC often represents a quicker and easier way of going public than IPO. Several private equity firms have sold portfolio companies to SPACs. Here is how I visualize it.

1- What is SPAC

 

Author: Sameer_Jain

Partner. Sameer Jain is founder of FinTech ActiveAllocator.com, the world’s first portal that seamlessly integrates traditional, illiquid and alternative investments within portfolios. Prior to this he was Chief Economist & Managing Director at AR Capital. Before that he headed Investment Content & Strategy at UBS Alternative Investments. At UBS, he served as a non-voting member of the Wealth Management Research investment committee, and as a capital allocator was responsible for all illiquid investing including fund manager selection and due diligence across the platform. Prior to UBS he headed product development & investment research at Citigroup Alternative Investments that managed over $75 billion of alternative investments across hedge funds, managed futures, private equity, credit structures, infrastructure and real estate. Here he led a team that developed proprietary models for portfolio strategy and asset allocation with alternative investments, provided investment support and research to pension plans, sovereign wealth funds, endowments as well as internal clients including Citi Private Bank. Before this he was with Cambridge Alternative Investments and SunGard (System Access) where he travelled to over 80 countries for work across Europe, Asia, Middle-East and Africa. He has written over 30 academic and practitioner articles on alternative investments with thousands of downloads at SSRN, presented at over a hundred industry conferences and has coauthored a book, Active Equity Management. Mr. Jain has multiple degrees in engineering, management, public administration and policy and is a graduate of Massachusetts Institute of Technology and Harvard University. He is a recipient of the Alfred Sloan Fellowship and subsequently was a Fellow of Public Policy and Management at the Harvard Kennedy School of Government for a year. He holds Series 7 and 66 securities licenses.

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