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

Dirty price

The total price payable on the purchase of a gilt. It’s calculated as the clean price plus accrued interest.

UK Treasury bill

A debt instrument issued by the UK government with a maturity of less than one year.

Know Your Customer (KYC)

A legal requirement for financial firms to understand exactly who their customers are. Used to prevent money laundering and terrorist financing.

Direct listing

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

Synthetic ETFs

An ETF that that reproduces the return of an index through the use of swaps.

Accrued interest

The interest earned on a gilt since the last dividend date. When buying a gilt, the buyer pays the accrued interest at the time of a transaction to the seller in addition to the clean price of the gilt

Quantitative easing

Find out what quantitative easing is and how central banks use this monetary measure to encourage economic growth.

52-week high/low

The highest, or lowest, price a share has traded at in a passing year.

NASDAQ

A US stock exchange specialising in the shares of technology companies.

What is a SPAC?