Harneys launches new Legal Minds on Markets podcast series

Introducing Legal Minds on Markets, a new series of podcasts providing clear views and incisive commentary on trending topics in the financial world with an offshore slant.

The spectacular rise of SPACs: Part one

In our first episode George Weston, Partner in our Corporate team in the BVI and an expert on ECM and M&A transactions, and Murray Roberts, Director at Harneys Fiduciary based on the US West Coast, discuss the hot topic of Special Purpose Acquisition Companies (SPACs) which have dominated equity capital markets over the last 12 months.

BVI and Cayman

Over the course of 2020 there were just under 250 SPAC IPOs in the US, which raised on average US$330 million each, according to SPAC Research. More than a third of these SPACs were incorporated in either the Cayman Islands or the BVI. We take a closer look at the increasing importance offshore jurisdictions are playing to the SPAC market and why incorporating offshore makes sense.

 

Key Takeaways

• The origins of SPACs and the spectacular rise of SPACs starting in 2019 and accelerating in the course of 2020.

• A rundown of the 3 stages of a SPAC lifecycle: (1) pre IPO planning and implementation; (2) the IPO itself; and (3) the resulting business combination.

• The advantages of using BVI or Cayman for a SPAC, including taking a look at investor familiarity and sentiment, flexible corporate laws, and a strong rule of law.

• The FinTech and Healthcare sectors are among the most prominent industries which are using BVI or Cayman as their place of incorporation.

• Over US$80 billion was raised through SPACs in 2020, and we discuss whether SPACs will replace the role private equity has historically taken in driving M&A activity.

• We consider whether SPACs are democratising access to investments.

• We discuss how other jurisdictions around the world are watching and responding to the SPAC boom in the US.

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