The trust
Trust account
The segregated account holding the IPO proceeds, invested in short-dated government securities and released only on a closing or a liquidation.
Also written: the trust, trust
Proceeds from the offering go into a trust held by an independent trustee, generally Continental Stock Transfer & Trust. The money is invested in Treasury bills or a government money market fund and cannot be used for operating expenses.
It leaves the trust in exactly three circumstances: paying redeeming shareholders, funding the business combination at closing, or being returned to public shareholders in a wind-up.
Why it matters
The trust is what makes the downside knowable. Everything an arbitrage desk does with a pre-deal SPAC is arithmetic against this balance.
Related terms
Trust per share
The trust balance divided by the public shares outstanding, which is the amount a redeeming holder receives.
Redemption
A public shareholder's right to hand back shares for their pro-rata share of the trust, exercisable at a vote.
SPAC
A shell company that raises cash in an IPO and then has a fixed window to merge with a private business, or return the money.
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.