Compared to the traditional IPO process, SPAC IPOs and de-SPAC business combinations can be used as an alternative means for private companies to enter the public markets. (Source: Shutterstock)
The Securities and Exchange Commission (SEC) adopted new rules aimed at better protecting investors of special purpose acquisition companies (SPACs).
Compared to the traditional IPO process, SPAC IPOs and de-SPAC business combinations can be used as an alternative means for private companies to enter the public markets.
But “given the complexity of these transactions, the Commission seeks to enhance investor protection in SPAC IPOs and de-SPAC transactions with respect to the adequacy of disclosure and the responsible use of projections,” the SEC announced Jan. 24.
The new rules and amendments include, among others:
- Enhanced disclosures about conflicts of interest;
- Details about SPAC sponsor compensation;
- Providing additional information about the target company to investors; and
- Requiring target companies to assume responsibilities for disclosures in registration statements.
“The rules more closely align the required disclosures and legal liabilities that may be incurred in de-SPAC transactions with those in traditional IPOs,” the SEC wrote.
SPACs have been around since the 1990s and the dot-com era. But when global financial markets crashed during the COVID-19 pandemic and traditional IPO activity stalled, SPAC activity started growing to record levels.
But in the spring of 2022, the SEC proposed new rules to strengthen SPAC disclosures and merger transactions with shell companies. That overhanging threat of federal intervention froze the booming SPAC market, and deal volume trailed off.
Private companies focused on opportunities in clean energy and energy transition saw a significant amount of SPAC investment during the pandemic, according to data compiled by White & Case.
Several oil and gas and oilfield services companies have also used the SPAC route to go public, including Drilling Tools International, Granite Ridge Resources, HighPeak Energy and Magnolia Oil & Gas.
RELATED
SPAC Attack: Clean Energy, Oil & Gas Cashed In on Pandemic-Era Frenzy
Recommended Reading
Crescent to Double, Largely Through M&A, in the Next Five Years, CEO Says
2024-10-23 - Crescent Energy CEO David Rockecharlie said that after closing the SilverBow acquisition, the company is continuing to hunt for new assets, although few make it past the company’s screening process.
Q&A: Exxon Mobil Pioneers the Permian and Guyana
2024-12-03 - Liam Mallon, Exxon Mobil’s upstream president, discusses how XOM liquids production has hit a 40-year high on the 25th anniversary of the Exxon-Mobil merger, and plans for the future.
Northern Scores Early Mover Advantage with $2.6B Uinta Basin Deal
2024-10-24 - Northern Oil and Gas CEO Nick O’Grady said the Uinta Basin has stayed off the radar but a time may come when Utah’s best kept secret starts to heat up in the M&A market.
Exclusive: Enbridge’s Next Plans Post Dominion Acquisitions, More LNG
2024-10-02 - Enbridge’s Allen Capps shares the company’s long term growth solutions, and his optimism on gas prices, following completion of transformational natural gas deals with Dominion, in this Hart Energy Exclusive interview.
Despite Low Prices, Thrifty, Efficient E&Ps Keep Distributions Flowing
2024-10-08 - Even with lower commodity prices, producers have maintained healthy shareholder returns through dividends and buybacks thanks to M&A, drilling efficiencies and capital discipline.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.