Special Purpose Acquisition Companies (SPAC)

Special Purpose Acquisition Companies (SPAC)

An alternative to the traditional IPO (Initial Public Offering) is the option of listing a Special Purpose Acquisition Company (SPAC) on the stock exchange. A SPAC is a shell company with no own business operations. Its sole objective is to raise capital through a listing, the proceeds of which are subsequently used to acquire a non-listed company within a limited period of time and to indirectly list it on the stock exchange. While the company to be taken over is not yet determined at the time of the SPAC listing, the industry of the acquisition target often is known at this point. SPACs are particularly suitable for well-established companies with sound growth potential seeking a safe, timesaving and cost-effective alternative to a traditional IPO.

Initiators and management are considered key to the transaction’s success. The management team is often composed of industry veterans, private equity sponsors or other financing experts with a track record (sponsors). Their expertise enables them to raise capital for the acquisition and operation of the new public company. A SPAC must find an attractive acquisition target within a predetermined period, typically 24 months or less. Once the deal is complete, a new listed company is formed (so called De-SPAC).

At Deutsche Börse, SPACs can be listed on the Regulated Market of Frankfurter Wertpapierbörse (FWB®, the Frankfurt Stock Exchange; General Standard and Prime Standard).

Advantages

  • The timeframe for a SPAC is less rigid than is usually the case with an IPO.
  • Issuing costs are comparatively low and the company does not face the risk of a high price discount on the day of the listing. Also, SPACs can be an attractive option in economically challenging times.
  • Roadshows are less extensive than customary for an IPO.
  • The sponsor can become an anchor shareholder. 

Main features and particularities

1. Investors receive SPAC shares of stocks and warrants 

  • Initially linked compound securities (units) are issued, which consist of an ordinary stock and, as a rule, a warrant; for structural reasons, the two securities are traded separately shortly after listing.
  • The warrants can usually be exercised following the acquisition of a target or, at the latest, within a maximum period of usually four years following the listing, and they entitle the holder to acquire further stocks at a fixed issue price. 

2. Basic admission requirements

  • In principle, the issuer of shares eligible for admission to trading must have existed as a company for at least three years and have disclosed its financial statements for the three financial years preceding the application in accordance with the rules applicable thereto (cf. Section 3 (1) BörsZulV).
  • As this is usually not the case with a SPAC, the management board will allow the shares to be admitted, notwithstanding the above stated rule, if it is in the interest of the issuer and the public to do so (cf. Section 3 (2) BörsZulV). The management board may make a discretionary decision in this regard. For the admission of SPACs, the Frankfurt Stock Exchange has hitherto exercised its discretion in individual cases and decided in favour of admission to the Regulated Market if all of the following conditions were met:
    • The proceeds of the issue is paid into an interest-bearing escrow account.
    • The intended use of the proceeds of the issue is detailed in the prospectus.
    • The SPAC provides evidence that its existence will be limited to a fixed period of time and that in the event of its liquidation, the assets in the escrow account will be returned to the investors, and it is ensured that the use of the assets in trust is decided with a shareholder majority of at least 50 per cent.

The basic admission requirements, which also apply to SPAC listings, can be found in our factsheet.

We connect you to experts from our Deutsche Börse Capital Market Partner network who will support you in the realization of a SPAC listing.

Deutsche Börse Venture Network

Every company has its own growth path. The Deutsche Börse Venture Network offers individual support and a range of flexible service modules. The offer is aimed at start-ups in all sectors, from early to later stage and various exit perspectives. 

Your IPO roadmap – The Going Public IPO line

We support you in optimally preparing your IPO – step by step through to first price determination. This includes choosing your Listing Partner, developing your issue concept, compiling all the necessary documentation, placement and admission and first trading in your company’s securities.

You are already familiar with the IPO process?

Challenge your Company - Exclusive workshops for start-ups and stock exchange candidates

With the workshop series "Challenge your Company" we have created a platform for knowledge transfer and personal exchange with experts and CEOs or CFOs who have already listed companies on the stock exchange successfully. During the nationwide workshops, you will receive first-hand, high-quality know-how, best practice tips and unique practical knowledge on the subject of raising capital via the stock exchange.

DirectPlace – subscriptions through Börse Frankfurt

Avail yourself of the opportunity to lock into semi-professional investors and private investors when placing your securities. Benefit from a balanced mix of investors and increase your placement reach – making your security flotation a real success even before the first trading day. We support your placement with an information campaign that targets the right groups and the technical underwriting options that FWB®, the Frankfurt Stock Exchange provides.

Celebrate your stock flotation: The first price determination on the floor and online in the phases of real-time trading

Turn your IPO into a real event: On the first day of trading you can present your company in the trading hall at FWB® the Frankfurt Stock Exchange and world-wide – reaching a very large audience. Watch first price determination for the shares live. Using the Xetra® Start visualisation tool your investors, clients and business partners can follow the initial trading phrases online in real time, from the very first price determined for the shares.

Additional Information

Contact

Secure the future and competitiveness of your company. We would be pleased to inform you about the advantages of raising equity and debt capital through the stock exchange.

Please contact us:

Listing & Issuer

Germany