SPARCs: An Attractive Alternative to Traditional SPACs?

Like a traditional SPAC, a SPARC is a shell company that is seeking to identify and combine with a private company, with the post-combination entity being a capitalized public company. Unlike a traditional SPAC, a SPARC does not raise any public capital at its onset.

On September 29, 2023, the U.S. Securities and Exchange Commission (SEC) declared effective a registration statement for Pershing Square SPARC Holdings, Ltd., which is contemplating a unique variation on the traditional special purpose acquisition company (SPAC) structure. This variation, called a SPARC—or special purpose acquisition rights company—was spearheaded by billionaire investor Bill Ackman through his investment fund, Pershing Square Capital Management, L.P., and was designed to address several pain points for SPACs, which have lost popularity after frenzied activities in 2020 and 2021.

Read WSGR’s client alert about SPARCs here.