The current boom in special purpose acquisition companies. 20 May 2021
Unprecedented" became the word of 2020; used to describe many of the challenges facing the world then (and still present today) it became a common feature of the year's news reports, but it is also a word that aptly describes the Special Purpose Acquisition Company (SPAC) market during 2020 – albeit in a much more positive sense. 2020 was a record year, and then some. for SPACs in the United States. According to one of the industry's leading data sources, SPAC Insider, over $83 billion in gross proceeds was raised from 248 SPAC IPOS in 2020. That compares with a mere $13.6 Billion in gross proceeds from 59 SPAC IPOs in 2019 and just $10.8 Billion raised in 2018 from 46 IPOs. That 2018 and 2019 were both seen as bumper years in themselves, setting their own, shows just how "unprecedented" 2020 was. The pace of SPAC activity has continued into 2021 and shows no signs of decreasing, in fact by all accounts, it is increasing. To date 2021 has already seen almost as many SPAC IPOs raising almost as much money as the whole of 2020…and the pace continues. As SPACs enjoy unprecedented levels, Venture Capital (VC) and Private Equity (PE) firms have increasingly sought to incorporate SPACs into their investment and structuring toolkits. In many respects, the aims of SPACs and customary VC / PE strategies are very similar and firms have seen that using SPACs in place of traditional fund and acquisition structures might offer multiple advantages. 2020 saw a number of PE backed SPAC launches and this trend looks to continue into 2021. Some of 2020 PE SPACs have already announced major business combinations. If these PE SPACs prove successful, then the SPAC could become a major part of how PE and VC does business over the next decade. While the current boom level of SPAC activity may not be sustainable and the SEC and other regulators have signalled a desire for great scrutiny and perhaps some additional regulation of SPAC structures, the utility of the SPAC remains clear and its uptake by mainstream investment firms looks set to stay.
Michael Killourhy, Ogier
Michael advises on a broad range of corporate and corporate finance transactional matters, including mergers and acquisitions, equity and debt capital markets, financings and complex corporate restructuring. Michael is widely recognised as one of the BVI's leading public company experts and its pre-eminent special purpose acquisition company expert. Michael's expertise in this area has been recognised internationally with him being invited to take prominent speaker roles in the SPAC industry's premier international convention, as well as being freqMichael's expertise also makes him a key member of Ogier's multi-disciplinary Private Equity team for both the acquisition and exit phases of downstream PE advisory. Complimenting his general acquisitions skills, Michael is a leading BVI practitioner in structuring, investment and shareholder agreements and management and employee incentive arrangements, while his IPO and general capital markets expertise makes him a unique asset on exit strategies. Michael's accomplishments in this area are well illustrated by his role in advising US private equity firm Baupost on its investment in UK prepared foods supplier Bakkavor and its subsequent exit by way of Bakkavor's successful GBP 1 Billion plus IPO on the London Stock Exchange.
Michael is also a market leading adviser on complex corporate and finance reorganisations and reconstructions. He lead the BVI corporate teams on Constellation Overseas' 2019 ground breaking "soft touch" provisional liquidation and subsequent 2020 BVI scheme of arrangement, as well as the mammoth financial reorganisation of UK-Nigerian oil and gas group Severn Energy's note programmes.
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