Last week we talked about what an IPO is. This week we will talk about an acronym that is increasingly seen in the international financial press: SPAC. What is a SPAC? It stands for special purpose acquisition company. These are companies that are listed on the stock exchange but do not have any operations. They raise funds from investors to use in the purchase—total or partial—of other companies, which then become publicly traded. It is a form of IPO known as a "reverse merger." SPACs, known as blank check companies, have been around for decades: well-known companies such as Burger King, TGI Friday's, and, more recently, Virgin Galactic—Richard Branson's space travel company—went public thanks to this mechanism. Some, such as Burger King in 2012, have been hugely successful. Others, such as TGI Friday's, were resounding failures. In 2020, they began to take off, and 2021 is shaping up to be their stellar year. Before the end of the first two months of the year (through February 23), there have been 166 SPAC IPOs, worth $38.3 billion. That number compares with 248 SPAC IPOs 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