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Easier Access To Ipos Is More Attractive To Investors Than The Spacs Share Price

A SPAC provides investors an easier alternative to traditional IPOs, and market spacs share price is $10 coupled with warrants.

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Easier Access To Ipos Is More Attractive To Investors Than The Spacs Share Price

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  1. Easier Access To Ipos Is More Attractive To Investors Than The Spacs Share Price ByJosie Patra February 2, 2022 SPACs Share Price Article Overview      SPACs share price is not the real attraction for investors The post IPO scenario The SPAC story in 2022 SPACs are under SEC’s scanner Further Reading A Special Purpose Acquisition Company raises capital through an IPO or Initial Public offering for acquiring a company or merging with it. SPACS are no-operational companies formed with the sole purpose of providing a plank for acquiring or merging with an existing company. The other name of SPAC, which

  2. exists on paper, the shell companies, provides an alternative path to IPO and are also known as shell companies or blank check companies that raise money and trade on a stock exchange. Typically, the stock price or spacs share price is $10 per share. Investors are showing much interest in SPACs over the past two years, and in 2021, SPACs $162 billion in the capital by taking the IPO route. The number of SPACs formed in 2021 was 613, more than double in 2020 when only 248. The total number of shell companies formed during the two years is more than the total number of such companies in the past two decades. SPACsshare price is not the real attraction for investors The stock price of a SPAC is not the main attraction for investors who eye for the warrant combined with the common stock. The opportunity to exercise the warrants is the biggest attraction for investors so that after identifying the target of acquisition and closing transactions, they can get more common stock shares. With the help of the warrant, the holder receives the right to buy more stock at a fixed price anytime later. The exercise price of the warrants is about 15% higher than the IPO price. After a few weeks after completing the IPO, the holders can trade the warrants separately from the SPAC stock. The company must place at least 85% of the capital raised through IPO in an escrow account for carrying out a future acquisition. However, the practice is to set aside 97% of the proceeds in the escrow account and use the remaining 3% for covering SAPC operating expenses and underwriting fees, including legal and accounting fees and fees for due diligence. Funds in the escrow account are invested in government bonds. In brief, the above modus operandi explains how to do SPACs work.

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