Special purpose acquisition companies fall out of favour with investors - Business MattersBusiness Matters

After an wave of special purpose acquisition companies, known as Spacs, the tide appears to be turning, with some of the highest-profile examples now under pressureSpacs — or blank-cheque funds — are shell companies that raise money via initial public offerings before listing on a stock exchange.

Once a deal is finalised, the Spac takes its target public by absorbing it and its investors take a slice of the new company.

Two months ago shares in Sir Richard Branson’s VG Acquisition Corp surged to $17.65 when it announced its merger with 23andme, a genetic testing firm.

In the weeks since FinTech Acquisition Corp confirmed its deal with eToro, the trading platform, its shares have dropped by more than a quarter.

The chairman of one Spac described the market as “way overcrowded”, bemoaning the role of “jam tomorrow-type companies” in the glut.

Published On: Sat, 03 Apr 2021 07:54:26 GMT