Special Purpose Acquisition Companies (SPACS) and Cash Shells

Since the beginning of the Coronavirus pandemic, there has been a great deal of publicity around high profile SPACS that have listed on NYSE / NASDAQ and Amsterdam, many with cash war chests running into hundreds of millions of Dollars.

The UK has lagged behind in the SPAC activity due to its more conservative regulatory framework. However, Xavier Rolet, the former CEO of the London Stock Exchange, recently quoted that the UK's current review of its regulations presents a "golden opportunity" to draw companies to London's stock exchanges over New York or Amsterdam.

SPACS and Cash Shells (a term more commonly used in the UK) are simply entities which have no assets apart from cash and are listed on a stock exchange. These entities can provide an attractive option to private enterprises with ambitious growth plans looking for funding and a stock market listing, without having to undergo a full IPO process.

Through this guide, we endeavour to provide an introduction to cash shell transactions and the key issues that privately-owned businesses may wish to consider when weighing up cash shells as a potential route to a stock market listing.

Hemant Thanawala

Managing Partner BGM Corporate Finance