Special Purpose Acquisition Companies (SPACs) have become impossible to ignore, comprising nearly half of all IPOs in 2020 and raising over $35 billion this year to-date. SPACs raise money in an IPO, then place it in a trust while the sponsor searches for a business or businesses to acquire, typically within a 24-month period following the IPO, effectively creating a “backdoor” IPO for otherwise private companies.

Of note in 2020, many recent SPACs have a specific mandate to target matters related to the “energy transition,” such as clean tech, green hydrogen, electric/autonomous vehicles, battery technology, etc. Many of these energy transition targets have little revenue or are even pre-revenue but are nearing commercialization and project significant revenue going forward, using SPACs as a way to secure the financing necessary for their capital-intensive projects to reach the market.

A key trend to watch through the remainder of 2020 and into 2021 will be the performance of these SPACs following their “de-SPACing,” or the consummation of their business combination, and whether future SPACs continue to focus on the energy transition (including targeting more established businesses).

ABOUT BAKER BOTTS L.L.P.
Baker Botts is an international law firm whose lawyers practice throughout a network of offices around the globe. Based on our experience and knowledge of our clients' industries, we are recognized as a leading firm in the energy, technology and life sciences sectors. Since 1840, we have provided creative and effective legal solutions for our clients while demonstrating an unrelenting commitment to excellence. For more information, please visit bakerbotts.com.