Ramey Layne, Brenda Lenahan, and Sarah Morgan are partners at Vinson & Elkins LLP. This post is based on a Vinson and Elkins publication by Mr. Layne, Ms. Lenahan, Ms. Morgan, Zach Swartz, K. Stancell Haigwood, and Layton Suchma.
Special Purpose Acquisition Companies (“SPACs”) continue to be increasingly popular vehicles for entities or individuals to raise capital to pursue merger opportunities, and for private companies seeking to raise capital, obtain liquidity for existing shareholders and become publicly traded.
This post provides an update to SPAC structures and transactions since a 2018 post (Special Purpose Acquisition Companies: An Introduction) and provides an expanded discussion of considerations for De-SPAC transactions and a description of recent SEC positions.
SPAC IPO Activity and Structure
Since the beginning of 2016, each year has set a record in terms of total number of SPAC IPOs and the amount of capital raised in those IPOs. Through June 30, 2020, the year was on pace to exceed the prior year once again and, through the date of this article, the amount of capital raised in SPAC IPOs in 2020 has already eclipsed all of 2019. Since the beginning of 2020 through July 22, 2020, 48 SPAC IPOs have been completed, raising almost $18 billion in proceeds, with another $5.4 billion of SPACs on file to complete IPOs this year. SPACs have remained popular notwithstanding the COVID-related market disruption, perhaps because of the flexibility of SPACs to pivot to attractive industries based on changing market fundamentals, and in part because SPAC IPO investors have the downside protection of redemption decisions.
Comment Letter to DOL
More from: Jeffrey Mahoney, Council of Institutional Investors
Jeffrey P. Mahoney is General Counsel at the Council of Institutional Investors. This post is based on a CII letter to the Department of Labor. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here) and Reconciling Fiduciary Duty and Social Conscience: The Law and Economics of ESG Investing by a Trustee by Robert H. Sitkoff and Max M. Schanzenbach (discussed on the Forum here).
I am writing on behalf of the Council of Institutional Investors (CII), a nonprofit, nonpartisan association of U.S. public, corporate and union employee benefit funds, other employee benefit plans, state and local entities charged with investing public assets, and foundations and endowments with combined assets under management of approximately $4 trillion. Our member funds include major long-term shareowners with a duty to protect the retirement savings of millions of workers and their families, including public pension funds and defined contribution plans with more than 15 million participants—true “Main Street” investors through their funds. Our associate members include non-U.S. asset owners with about $4 trillion in assets, and a range of asset managers with more than $40 trillion in assets under management.
The purpose of this letter is to provide you with our perspectives on the Department of Labor (DOL) “proposed amendments to the ‘Investment duties’ Regulation under Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA), to confirm that ERISA requires plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk adjusted economic value of a particular investment or investment course of action” (Proposed Rule).
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