Structure
At-risk capital
The money the sponsor puts in to cover offering costs and fund the trust above the IPO price, lost entirely if no deal closes.
Also written: private placement warrants, sponsor at-risk
Alongside the nominal founder shares, the sponsor buys private placement warrants or units at fair value. That cash pays underwriting expenses and sometimes tops the trust up above $10.00 per share.
It is called at-risk because it is unrecoverable in a liquidation. It is the sponsor's own skin in the game and typically runs to several million dollars.
Related terms
Sponsor
The entity that forms the SPAC, funds its costs, and holds the founder shares that pay off only if a deal closes.
Private placement warrants
Warrants the sponsor buys separately at fair value to fund the vehicle's costs.
Trust account
The segregated account holding the IPO proceeds, invested in short-dated government securities and released only on a closing or a liquidation.
See the term in the wild: the screener shows trust size, per-share value and deadlines for every U.S. SPAC, and each profile links to the filings the numbers came from.
Definitions describe market practice and are not investment, legal or tax advice.