Last week we talked about what an IPO is. This week we will talk about an acronym that is seen with increasing frequency in the international financial press: SPAC. What is a SPAC? It stands for special purpose acquisition company. These are firms that are listed on the stock exchange but do not have operations. They raise funds from investors for use in the purchase - in whole or in part - of other companies, which then become publicly traded. It is a form of IPO known as "reverse merger". SPACs, known as companies with a blank check, have been around for decades: well-known companies such as Burger King, TGI Friday and, recently, Virgin Galactic - Richard Branson's company that plans space travel - went public thanks to this mechanism. Some, such as Burger King, from 2012, have been great successes. Others, such as TGI Friday, turned out to be a resounding failure. In 2020 they began to take flight and 2021 is shaping up to be their stellar year. Before the end of the first two months of the year (through February 23), 166 SPAC IPOs have been registered, for US$38.3 billion. That number compares to 248 SPAC IPOs registered in all of 2020 and 59 in all of 2019. One of the sectors favored by SPACs this year is electric vehicles.

* Until February 23

Source: SPAC Insider