What is a 'SPAC'? Definition & meaning

Find our what a SPAc or special purpose acquisition company is.

SPACs or special purpose acquisition companies, are publicly-traded investment vehicles whose goal is to acquire or merge with a company from the proceeds of its own IPO, sometimes called a reverse merger.

SPACs are often focused on acquiring a business in a specific industry, like a tech firm or green energy business.

It’s important to remember that, unless it has performed a reverse merger, a SPAC is not like a traditional company. They have no business to run, they’re purely there to try and invest in another business and merge with it.

Full list of SPACs available to trade on Freetrade

Learn more: Detailed guide on SPACs

More terms

Direct listing

Going public without the traditional IPO. Existing shares, straight onto the exchange, no new money raised.

Yield to maturity (YTM)

What is yield to maturity and why is it useful?

Securities

Bonds and stocks.

Junk Bond

A form of debt investment that carries higher risk because of the likelihood that the issuer will default.

Investment Trust

A company that pools money together from multiple investors and then invests it.

Gilt

What is a gilt?

Key Information Document (KID)

A document issued by an investment fund to help investors determine if it's the right fund for them.

Time-Weighted Rate of Return (TWRR)

A return calculated over the time period invested, that excludes extraneous elements, such as deposits to and withdrawals from the investment accounted.

Conditional dealing

Trading in new shares before they’re officially admitted to the exchange, on the condition that admission goes ahead.

What is a SPAC?