SEBI expert group to examine SPAC roll out

NEW DELHI:  Market regulator SEBI has formed a group of experts to examine the feasibility of introducing Special Purpose Acquisition Company (SPAC)-like structures in India, sources with knowledge of the development said on Thursday. A SPAC is a shell company that is publicly listed with the intent of merging with a private company that is seeking to go public without the cost and hassle of an initial public offering (IPO). 

SPACs are usually formed by private equity funds or financial institutions with expertise in a particular industry or business sector. Such companies have recently become popular in the US and  demands have been made to introduce them in India too.  

To check its feasibility in the Indian context, an expert group formed under SEBI’s Primary Market Advisory Committee (PMAC) has been asked to examine the sunject and submit its report at the earliest, a source said.

“SEBI wants to explore the potential of SPACs while at the same time building adequate checks and balances in the regulatory framework to take care of the associated risks,” they said.  The advantage for the sponsor company in the system is that it allows rapid deployment of capital to take advantage of opportunities. It also helps the target company to go public during periods of market instability or volatility in traditional IPO markets.