By the Corporate Communications Department of the BMV Group (Bolsa Mexicana de Valores), the Mexican Stock Exchange. bmv-comunicacion@grupobmv.com.mx
BMV has launched a new instrument to provide diversification for financing and more options for the investor portfolio. The newly-available Special Purpose Acquisition Company (SPAC) has opened up new opportunities for companies focused on the energy sector to participate in the Mexican Stock Exchange.
Over the past 18 months, the Mexican Stock Exchange— commonly known as BMV (Bolsa Mexicana de Valores, S.A.B. de C.V. or BMV Group)— has developed several innovative instruments that enhance trading options and represent more diversification for investors’ portfolios. Among those are Fibra E, CerPis, Green Bonds, Sustainable and Share Bonds, all beneficial options for sharing in the benefits of the Mexican Stock Exchange.
The newest product offering by BMV is a SPAC (Special Purpose Acquisition Company). This tool was conceived in 1990 and has operated successfully in countries like United States, Canada, the United Kingdom, and in stock exchanges such as the NYSE, Euronext and some Asian markets.
SPACs have focused on sectors such as national security, financial services, energy exploration and production, and health, among many others.
But… What is a SPAC?
The Special Purpose Acquisition Mexican Stock Exchange’s newest investment instrument: SPAC Company (SPAC) is a financing vehicle which, through a public company with no operations or assets, is listed on the stock exchange to obtain resources through an Initial Public Offering (IPO) of Shares and Appreciation Warrants (rights to purchase additional shares), with the goal of acquiring one or more companies within a given timeframe, usually 24 months, to complete a merger.
It must be noted that the company or “promoter ” issuing the SPAC is managed by a team of experts in the mergers and acquisitions environment. They are in charge of defining the investment thesis, and will add value to the management following the acquisition. Thus, independent companies, corporations and assets of varying sizes have access to a financial management team with operational expertise through the promoter, allowing for their development or growth of their capital through an IPO. Further, the appeal for the investor lies in the fact that, by purchasing a share, he/ she also receives a warrant which grants the right to purchase additional shares at a pre-established price.
In order to grant certainty to the investor’s participation, and in the rare event the SPAC does not bring an acquisition to term, the investment will be settled and the company delisted from the Mexican Stock Exchange. The resources that had been contributed by the investor will be reimbursed in cash, and the promoter would not be entitled to receive a share of such funds.
No doubt the SPAC is an important tool the Mexican Stock Exchange developed that will benefit the market and its participants, thus it is expected many companies will want to take advantage of the benefits of this new class of asset that will greatly add to the economic development of Mexico.
