What do Taylor Swift’s record company and Asian “superapp” Grab have in common? They are both part of Wall Street’s recent dealmaking fad: special purpose acquisition companies (Spacs).
Spacs are shell companies that are floated on the stock market with one purpose: to buy another company. This aims to achieve the same as a stock-market listing or initial public offering (IPO), but in reverse.
Instead of a traditional company seeking to raise capital from investors through an IPO, with Spacs the empty listed company is set up first.
For this reason, they are sometimes known as blank-cheque companies. Depending on where the Spac is listed, whoever is in control usually has two or three years to find a company to buy.