Analysis

Spac mania may be on US watchdog’s probe list

The US Securities and Exchange Commission is set to investigate the recent spike in special acquisition purpose companies listing on Wall Street.

The regulator has sent letters to US banks asking for information on their dealings with Spacs.

Around $79.4bn worth of Spac IPOs have listed globally this year — more than in the whole of 2020, according to data provider Refinitiv. Almost all of these listings were in the US.

Concerns may lie around the amount of due diligence done on the acquired companies by Spacs, the newswire reported, and whether shareholders are fully informed of all payouts or communications.

In addition, while Spacs often are structured similarly, each Spac may have its own unique features, and it is important for investors to understand the specific features of any Spac under consideration.

Read more