Special Purpose Acquisition Companies: An Analysis of the Investment Vehicle and Its Introduction in India

Abstract

As a result of its ability to emerge strong even during the most terrifying phase of the global financial disaster, India has emerged as one of the most sort after investment locations for foreign investors throughout the world. Because of the high degree of confidence held by investors, the investment environment in India is becoming increasingly favourable with each passing day. India is currently ranked as the world's fourth-largest economy by nominal GDP. Its excellent GDP growth rate, particularly in the area of purchasing power, has propelled it to second place among all emerging countries, according to the World Bank.

With improvements in India's infrastructure, investors are placing higher stakes on Indian start-ups and taking on more risks than ever before.

Dealmaking in South Asia's largest economy increased in the first seven months of 2021, as a huge number of international investors with deep pockets injected new capital into Indian start-ups, according to the World Bank. One of the recent entrants into this scenario was the formation of “Special Purpose Acquisition Companies”, or “SPACs”.

With the recent segue of Think Elevation Capital Growth Opportunities- a blank cheque company, into the Indian economy, set to raise $225 million and the recent Nasdaq listing of ReNew Power, one of India’s foremost renewable energy companies through RMG Acquisition Corporation II, it is essential to understand the working of SPACs.

This paper focuses on an analysis of the trajectory of the growth of SPACs, its functioning, the benefits and the risks attached to this concept. The functioning of SPACs is further analysed through a case analysis of the Nasdaq listing of ReNEw Power. The primary focus of the paper is to analyse the lacunae in the regulatory framework in India that hinders the introduction of SPACs in the economy.