Much has been made of special-purpose acquisition companies (SPACs) looking to bring so-called “unicorns” – private companies valued at over $1bn – to the public markets. With the pandemic giving many upstart tech players a bump, the firms being targeted often sit in the digital sector. But companies with business models founded on a low-carbon future may ultimately be where SPACs make their greatest mark.

This view is based on the policy and strategy shifts coming from governments, investors and companies in response to the impact that climate change is having on ecosystems, economies and societies.

China, for example, has vowed to become carbon neutral by 2060, while President Biden has signed an executive order calling for a reduction in US net CO2 emissions to zero by 2050, with the electricity sector being emissions-free by 2035. In the realm of transport, the US Growing Renewable Energy and Efficiency Now (GREEN) Act aims to drive up sales of electric vehicles (EVs) while in the UK, sales of new gas- and diesel-powered vehicles will be prohibited by 2030.

Meanwhile, institutional investors of all sizes and shapes are looking to decarbonize their portfolios. That means “no” to things associated with fossil fuels and “yes” to assets and businesses (and management teams) that will be essential for the move to a low-carbon economy. As for businesses themselves, no corporate mission statement is complete without the word “sustainability” or one of its variants.

Keeping it clean

For SPACs with a “green” target in mind, what do those assets look like?

EV manufacturers – such as Nikola, Fisker, Lordstown, Canoo and Lucid – are proving popular. All have gone or are going public through SPACs. Their suppliers are making waves too – witness the recent de-SPACs of EV battery maker Quantumscope and recycler Li-Cycle.

Not to be forgotten are the companies supplying and installing the charging infrastructure that the mass adoption of EVs will need, such as Evgo Services, which has also agreed to go public through a SPAC.

Then there are the businesses that will help countries decarbonise their electricity-supply sector. A December 2020 Princeton University report predicts that, in the US, wind and solar capacity, which stood at 213GW in 2020, could grow on average by around 40GW per year to 2025 and then by 70-75GW per year from 2026-2030. In turn, companies specialising in transmission infrastructure will be busy linking all those new turbines and solar panels to centers of demand. Technological advancements making green energy ever more competitive with fossil fuels, the GREEN Act extending credits for clean-energy projects, and President Biden’s call to accelerate transmission infrastructure development will only reinforce these trends.

Finally, there are earlier-stage technologies that could hasten the shift to net-zero emissions. Examples include carbon sequestration, low-carbon hydrogen production and hydrogen fuel cells. There’s also going to be burgeoning demand to store electricity generated by renewables. The US Department of Energy estimates that global deployments of grid-related energy storage will hit 160GWh in 2030, up from around 10GWh in 2019, a 27 percent compound annual growth rate.

Of course, not every technology – despite early promise – is going to make the commercial cut. And not every cleantech company has a future. Start-ups – whether in the cleantech space or not – typically have little revenue or profit to speak of and rely more on their projections when marketing to investors. More established firms should have some financial history to point to but may still suffer from investor uncertainty over their ability to scale up in the longer term.  

So SPAC sponsors and investors still need to choose their targets carefully – even if the pressure to de-SPAC is on.

Exit via the de-SPAC

For private companies and their shareholders seeking an exit, going public by merging with a SPAC may offer various benefits over a traditional IPO.

Most significantly, the company can:

  • avoid market and pricing uncertainty by agreeing up front on the key pricing terms with the SPAC;
  • market to de-SPAC investors using its projections, which is not done in the conventional IPO; and
  • benefit from the involvement, often through board representation, of the SPAC founders, who typically bring valuable additional market and industry insight.

Further, the Securities and Exchange Commission review process may be easier in a de-SPAC than in an IPO and the de-SPAC business combination may be consummated more quickly than a typical IPO.

For a detailed review of the 64 closed de-SPAC transactions in 2020, read our De-SPAC Debrief (PDF).

Next stops: Europe and Asia?

A lot of focus has been on US SPAC IPOs and business combinations involving a US target. But the SPAC phenomenon is becoming increasingly global – at both the business combination and IPO stages.

India’s ReNew Power, for example, will be listed on NASDAQ after agreeing to be acquired by a SPAC backed by a PIPE that included Chamath Palihapitiya, a former Facebook executive and high-profile SPAC investor, and BlackRock, among others. Meanwhile, the Amsterdam Euronext market has recently listed three SPAC IPOs, including a €250m listing in February 2021 sponsored by Infestos Nederland, a firm focused on sustainable investing, and Frankfurt listed its first SPAC in February 2021.

We expect other prominent global exchanges to try to get in on the SPAC act. The UK is currently looking at whether to make London-listed SPAC’s more attractive to sponsors and investors, with any rule changes possibly being implemented later in 2021. And stock exchanges in Hong Kong, Singapore and Indonesia are all reportedly evaluating permitting the listing of SPACs on their markets too.

Given that climate change is a global concern, the globalization of the SPAC phenomenon seems fitting. And with the issue needing an urgent response, the potential for SPACs to accelerate investment in cleaner companies and technologies can only be a force for good.


We advise founders, investors and target companies on SPAC IPOs and de-SPAC business combinations. With the range of potential listing venues on the increase, we allow the client to benefit from the most favorable transaction available, taking into account valuation, transaction speed and certainty, governance and litigation profile, and commercial ease of operation after the transaction closes. Feel free to contact Michael or Melissa for more information.