Want to trade like Henry Kravis? You could pony up a couple billion, or you could buy a SPAC. Special Purpose Acquisition Companies, or SPACs as they called are essentially blank check companies that are sold to the public with the promise that they will acquire another company.
So here's how it works. You can buy a SPAC just like a stock. That SPAC will look to acquire another company within two years. Once the acquisition goes through, you'll have shares in the newly formed company.
Investor appetite for private equity has fueled a recent growth in SPACs. In 2004, SPACs represented on 6% of IPOS. Year to date, they comprise over a quarter of the IPO market.