Capital Appreciation and Hulisani, two very different companies, have one thing in common: they started off as special purpose acquisition companies (Spacs). This is a sector IM thinks is well worth investigating. First authorised by the JSE in 2013, Spacs come to market as cash shell companies whose management teams are entrusted by shareholders to undertake yet-to-be found acquisitions. To its credit, the JSE put in place strict rules under which Spacs function. Among these are that all shareholder capital must be paid into an account managed by an escrow agent. If no investment is made within 24 months of listing, the agent must repay the capital to the shareholders. "It makes it crucial for a Spac to have a strong management team with sector expertise and a track record of deal making," says Georg Kahle, a Norton Rose Fulbright director. Capital Appreciation (Capprec) met the criteria to a T when it went to the market in October 2015 to raise R500m, the minimum required for a JS...

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