Frequently Asked Questions
What is a SPAC?
A Special Purpose Acquisition Company (SPAC) is a publicly traded shell company formed for the purpose of identifying and combining with an existing private company, taking it public in the process.
What is SPAC arbitrage?
A strategy that involves purchasing SPACs at a discount to their trust values and seeking to generate returns through redemption rights or post-announcement price movements. The strategy seeks to mitigate downside risk by relying on the SPAC’s trust account, which holds cash or cash equivalents.
Who are SPAC sponsors?
Most SPACs are formed by institutional investors, such as hedge funds, private equity firms or venture capital firms and executives with prior experience in the capital markets and industries that the SPAC has targeted.
What may make a SPAC appealing to investors?
An investment in a SPAC may appeal to investors because it can offer the upside of investing in a high-growth target company with potential downside protection features, such as redeeming shares at the time of the de-SPAC closing if the investor does not like the deal.
Why do companies choose to go public through a SPAC rather than an IPO?
One of the principal advantages of a SPAC transaction, as compared to an IPO, is speed. In general, a SPAC transaction can be completed more quickly than an IPO. Maybe more importantly, the pricing of a SPAC transaction occurs relatively early in the process at the time the business combination agreement is signed, as compared to an IPO where the pricing occurs near the end of the transaction.
What are Structured Notes?
Structured notes, and structured products generally, are retail products designed or “structured” to meet specific investment objectives, such as growth, income or risk management. They do so by combining a traditional security, like a bond, with a derivative component.
What may make Structured Notes appealing to investors?
Investors seek greater control over their portfolios with defined outcome investing. Structured notes can be a powerful portfolio tool because of their flexibility and customization options that can be tailored to client investment objectives or market views.
How do Structured Notes address downside risk?
Structured notes include features that may provide a degree of protection against market declines, while still allowing for some market upside. The protection is typically subject to certain conditions and does not eliminate the risk of loss.
After meeting certain criteria, what is the process to open an account?
· Complete a Data Sheet: A form will be sent electronically for you to complete and sign.
· Sign the Investment Management Agreement (IMA): Wealthspring Capital LLC will provide the IMA via electronic signature.
· Review Schwab Documents: Charles Schwab will send a secure link with instructions to access and sign account-opening documents.
· Fund the Account: After account setup, you will receive instructions to fund your account via wire or journal transfer.
Wealthspring Capital LLC (WSC) is a SEC registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.