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FAQ General

What is a SPAC?

A Special Purpose Acquisition Company (SPAC) is a company with no business operations of its own, formed to raise capital through a listing and with the purpose of acquiring a non-listed target company.

How is it different from a conventional IPO?

As an alternative to a conventional Initial Public Offering (IPO), a SPAC offers a target company an efficient, quick way to go public without the specific requirements of a standard IPO. Deal and price certainty are enhanced as the purchase price is based on a detailed due diligence and not subject to market volatility as it is sometimes the case during a classic IPO.

The sponsor and management team of a SPAC are key success factors since they bring in market expertise, access to assets and the ability to drive value creation in the run-up to and following the business combination. A key value of a SPAC therefore lies in the potential of the company it acquires, which it empowers to continue its success story as a listed company.

What are the benefits for potential target companies?

A SPAC provides an efficient route to go public for target companies and offers an attractive option for late-stage growth companies looking for a transaction-secure, time- and cost-saving alternative to a traditional IPO.

SPACs can be value-adding for pre-IPO phase companies as their leadership teams often look for a partner with expertise within their industry, who brings valuable experience to the table. Much like angel investing, joining forces with an experienced partner helps to guide and grow the company.

What are the benefits for investors?

Based on its ability to source deals, a SPAC provides access to appealing late-stage companies that investors would otherwise not have access to. A detailed due diligence prior to the business combination allows for detailed insight and transparency into the target. After the combination, the listed company can benefit from the industry expertise of the SPAC team, creating further value and driving post-merger performance. In addition, warrants issued to investors at the time of the placement provide investors with significant upside exposure.

FAQ Lakestar SPAC I

How are investor interests protected?

Compared to a traditional IPO, Lakestar SPAC I provides full downside protection until the business combination. Investors will have the choice to approve the business combination while retaining the option to redeem their shares.

The capital structure of Lakestar SPAC I is designed to align the interests of the founders with those of public shareholders, and to give the founders strong financial incentives to seek a business combination that provides opportunities for growth and enhanced value. In order to benefit together with the public shareholders from a positive share price development, only one-third of the founder shares will immediately vest and convert upon the consummation of the business combination. Vesting of the remaining two-thirds will depend on the share price performance after the business combination.

What happens with the capital raised until the business combination?

Proceeds will be held in escrow, whereby shareholders will be returned their initial investment in case they redeem their shares at the time of the business combination or if the SPAC is liquidated, subject to certain procedural steps. Furthermore, the sponsor will compensate for negative interest on the capital held in escrow.

What companies is Lakestar SPAC I looking to invest in?

The Lakestar SPAC I team intends to invest in a late-stage / pre-IPO phase company with principal business activities in Europe, the UK or Switzerland. Potential targets are tech-based with a focus on SaaS (software as a service), fintech, transportation and logistics, healthtech and deep tech. The pursued equity value is between €750m and €4.0bn.

Do investors have a say regarding the target?

Any proposed business combination must be approved by a simple majority of the votes cast at the shareholders’ meeting.

Can investors redeem their shares?

Lakestar SPAC I offers investors the opportunity to redeem all or a part of their shares upon the completion of the business combination at a price of €10.00 per share, regardless of whether the investor voted for or against the business combination.

If investors redeem their shares, do they also have to relinquish their warrants?

No, at time of Business Combination, shareholders will be able to ask for redemption, regardless of their vote at the general shareholders’ meeting and still keep their warrants. Public warrants will become exercisable 30 days after the consummation of a business combination.

Is there a deadline to the business combination?

Lakestar SPAC I will have 24 months to consummate a business combination. This deadline can be extended by an additional three months if a legally binding agreement has been reached with a target within the initial 24 months.

If no business combination is consummated within the deadline, the SPAC is liquidated, and the capital raised and held in escrow is released and distributed to shareholders.

On which stock exchange will Lakestar SPAC I shares be listed?

The public shares will be admitted to, and listed on, the regulated market (regulierter Markt) of the Frankfurt Stock Exchange (General Standard), the public warrants will be introduced to trading on the open market (Freiverkehr) of the Frankfurt Stock Exchange (Börse Frankfurt Zertifikate AG).