While a clean public shell has some value, few target enterprises are interested in a transaction where no additional cash is brought to the table. Crucially, while most business combinations require “minimum cash to close”, cash that the SPAC brings to the table, the deal cannot depend on a single dollar in the trust being available to the surviving entity at the business combination. Lynwood ReinhardtĪ SPAC is, at its core, a publicly listed entity formed for the purpose of effecting a business combination. (3) Indian institutional investors looking to participate in a SPAC-related PIPE. (2) Indian promoters considering forming a SPAC or (1) Indian companies that are potential investment targets of a SPAC The pivotal function of the PIPE is important for all parties involved, including:
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While much ink has been spilled concerning the nature of SPACs and their merits and demerits, little attention has been paid to the real driver of the modern deal – the PIPE (private investment in public equity).
The SPAC, or special purpose acquisition company, is a resurgent spin on the relatively well-trodden concept of a blank-cheque public company, formed to acquire a yet-to-be-identified operating business. Lynwood Reinhardt and Brooke Dorris examine the impact of private investment in public equity on de-SPAC transactions
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