News & Insights

Cayman Islands for SPACs

A special purpose acquisition company (“SPAC”) has no commercial operations and is essentially a blank check company which goes public with the sole intention of acquiring a target entity within a set time period (typically 18 or 24 months).

The last 24 months have seen a significant increase in number of successfully launched SPACs as an alternative way to raise capital and the Cayman Islands has been the domicile of choice for around one third of all SPACs globally who have chosen to be structured as Cayman Islands exempted limited companies.

Market activity dramatically slowed in April 2021, but since that time there has been a steady uptake as sponsors adjust to evolving market terms and increased SEC scrutiny.

We expect to see this trend in the use of the Cayman Islands for SPACs launches continue, as the jurisdiction has proven itself to be an efficient jurisdiction to launch these vehicles to access and raise capital.

There may however be pressure on SPAC terms, such as the amount of time available to locate and close a deal, the size of the offering or sponsor incentives.

Contact our experts for further advice

View profile for Chris HumphriesChris Humphries
Managing Director & Head of Funds
, View profile for Jonathan McLeanJonathan McLean
Partner and Head of Banking & Regulatory

This publication is for general guidance and is not intended to be a substitute for specific legal advice. Specialist advice should be sought about specific circumstances.