Guest post – Outer SPACs

Today’s guest post is a light-touch introduction to the pretty heavy subject of company formation – tying in quite well to the book on legal personality that I posted about last week.

Monica Sandor has been an English translator at the Belgian Financial Services and Markets Authority (FSMA) for 15 years, and I have also had the pleasure of working with her. She also has an academic hat, having spent 11 years teaching at Queen’s University in Canada, and 4 years at a postgraduate institute on marriage and the family in Brussels, Belgium. Over to you, Monica!

Outer SPACs

SPACs, or special purpose acquisition companies, have recently been the subject of much discussion and of a consultation paper drawn up by the FSMA. The latest trend is for these ‘blank cheque’ firms to extend their financing beyond Earth, out into ‘SPACe’.

SPACs are formed on ‘spec’ and, once established, go looking for a company to invest in and take public. For space start-ups who are keen to raise capital on the markets, this model reduces the risk.

In February of this year, launch vehicle manufacturer Astra announced its merger with Holicity, a SPAC, to launch its business on Nasdaq. Astra offers a series of rockets that carry payloads for customers both public and private, and plans to add to those a new line of modular spacecraft platforms.

The trend in the sector was given impetus in 2019 by the ‘space tourism’ firm Virgin Galactic (founded in 2004 by the British entrepreneur Sir Richard Branson), when it merged with a SPAC (Social Capital Hedosophia) to become a publicly traded company. In March 2021, Branson hired Credit Suisse Group AG and LionTree LLC to find a special purpose acquisition company to take another of his companies, Virgin Orbit, public.

A Luxembourg-based provider of space-based data and analytics, Spire Global, has just announced its merger with the SPAC NavSight Holdings. The business combination was approved by the SPAC’s shareholders at a meeting on 13 August 2021. NavSight Holdings is now listed on the New York Stock Exchange (new ticker symbol ‘SPIR’). And seven more SPAC-space mergers are in the exploratory stage.

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Speaking of space and of Luxembourg (which has very little of it on Earth!), the Grand Duchy has since 2016 been repositioning itself on the market. As it bowed out of the tax haven industry, it began promoting itself as a propitious centre for the space business. The tiny nation is not new to the skies beyond Earth – it has since the 1980s been a hub for ‘near-space’ investment, that is, companies involved in orbital satellite networks.

Luxembourg is launching a series of new initiatives in the area of tax, regulations, and R&D intended to attract new space ventures, including some that are looking to extract resources from asteroids (space mining). Clearly, these days we have less to worry about an asteroid hitting Earth than about Earth hitting the asteroid running.

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You might also be interested in this Lexology post from Macfarlanes LLP on a new  regime for SPACs introduced by the UK’s Financial Conduct Authority, designed to make the UK a more “SPAC-friendly” jurisdiction.

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