SPAC stands for ”Special Purpose Acquisition Company”. A SPAC intends to raise capital from a broad group of owners through an IPO in order to subsequently – normally within 24-36 months – acquire a company. An acquisition (business combination) must be approved by the shareholders and a majority of the independent board members of the SPAC at a general meeting of shareholders. After approval of a review process by Nasdaq, the SPAC will be listed on the market place applied for.
Retail investors in the capital market have traditionally had limited opportunities to invest in unlisted companies. Investing via private equity companies is not normally an available alternative. Subscribing to and participation in an IPO does not provide any guarantee for allotment or the desired allotment of shares. Participation in what is known as a private placement in an unlisted company means that the company remains unlisted during the period – specified or not – stipulated by the terms and conditions.
A SPAC is designed to enable retail investors to invest in unlisted companies which will become listed shortly after a business combination has taken place. Interest in unlisted companies has grown apace with the expansion of the public markets. This has in turn created the prerequisites for SPACs. This trend has been particularly strong in the US with a large number of IPOs of SPACs in recent years. In Sweden, Nasdaq Stockholm introduced rules for SPACs on 1 February 2021. The regulations are stated in Nasdaq Nordic Main Market Rule Book for Issuers of Shares.
Unlisted companies like listed companies and other organizations operate in a world characterized by changes that entail new challenges and the need for continuous adjustments of business activities and sometimes more extensive structural changes. This may involve efficiency improvements of operations expansion of the business geographically or in terms of products, changes in business and revenue models etc. Not infrequently, external capital is required as well as expertise to be able to carry out changes. Unlisted companies in need of finance normally have to resort to the banking system.
SPACs can now offer unlisted companies a convenient, flexible and fast process to obtain access to the risk capital market through an IPO via a business combination. This may be an attractive alternative to a traditional stock exchange listing or a private sale. The SPAC can, among other things, offer strong and long-term owners, expertise on a listed environment and business development, a cost-efficient and more secure listing process and meet various needs that the owners of the unlisted company may have. Please refer to the section ”What is tbd30?” on how tbd30 complies with Nasdaq’s rules for SPACs.