What is overfunded trust in a SPAC?

A trust funded above the $10.00 unit price, so redemption begins above the offering price rather than at it. In competitive markets sponsors fund the trust at $10.10, $10.20 or more per unit to attract investors. The extra comes from the sponsor's at-risk capital.

The trust

Overfunded trust

A trust funded above the $10.00 unit price, so redemption begins above the offering price rather than at it.

Also written: over-funded trust

In competitive markets sponsors fund the trust at $10.10, $10.20 or more per unit to attract investors. The extra comes from the sponsor's at-risk capital.

An overfunded trust raises the floor under the shares from day one and is a straightforward read on how hard the sponsor had to work to fill the book.

Related terms

Trust per share
The trust balance divided by the public shares outstanding, which is the amount a redeeming holder receives.
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.

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.