What’s a SPAC and could Wall Street’s hottest craze end in tears?

SPACs – special purpose acquisition companies – are one of the hottest investment trends of the moment. But regulators are warning investors to be cautious.

What do Shaquille O’Neal, Colin Kaepernick, Peyton Manning and Richard Branson have in common? Yes, they’re all famous and/or rich. But they are also linked with one of the hottest investing phenomena of the moment: SPACs, or special purpose acquisition companies. More than 550 SPACs – also known as blank-cheque companies – have filed to go public on United States exchanges this year, looking to raise over $160bn, data compiled by Bloomberg shows. That’s more than for all of 2020 combined. On Tuesday, the red-hot trend hit another milestone when Southeast Asia’s most valuable startup, ride-hailing and food delivery app Grab Holdings, agreed to a SPAC merger that values the firm at $40bn- making it the biggest blank-cheque deal on record.