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Explained: What is SPAC listing and how does it work

Updated : February 25, 2021 02:44 PM IST

India's first US listing through Special Purpose Acquisition Company or SPAC is here as ReNew Power raises over a $1 billion in the US market.

What is SPAC listing?

SPAC listing is the most talked about shortcut to global listing. SPAC -- popularly known as 'Blank Check' -- are shell corporations designed to take companies public without taking the IPO route.

How does the SPAC listing work?

There is a listed SPAC which targets and acquires an operational company and then it comes up to a listed successor company. This is what the Indian companies are eyeing.

SPAC listing and the Indian structure

Indian companies are gearing up through a structure of de-SPACing which means reverse merger into a listed SPAC. For this, a company needs to externalise or create an offshore entity.

However, the biggest issue Indian companies are facing -- apart from regulatory concerns -- is the transfer of shares to the externalised entity which under Indian law is taxable.

Benefits of SPAC listing

There are several benefits -- access to capital, better valuation, global visibility, short process and less compliance.

To know more, watch the video.
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