man opening curtain to reveal something
Sergey Nivens/123RF

In the wake of a frenzy for shell company listings, the NEO Exchange is launching a new mid-cap vehicle that aims to fill the gap between capital pool companies (CPCs) and special purpose acquisition corps (SPACs).

The Toronto-based exchange has announced a pilot program to facilitate capital-raising and listing for companies in the $50–$500 million range through a new vehicle: growth acquisition corps (G-Corps).

G-Corps are designed to sit between the CPCs that are available for small caps on the venture exchange and large-cap SPACs.

“The G-Corp addresses a gap in the capital markets for acquisition corporations,” NEO said in a release.

Among other things, G-Corps must raise at least $2 million in an initial public offering (IPO) that’s held in escrow. Founders are limited to 20% of the equity and they must complete a qualifying transaction within 24 months (subject to shareholder approval) that results in an issuer with a market cap of at least $30 million that meets the exchange’s listing requirements.

“Quality private companies with an enterprise value between $50 million and $500 million represent a phenomenal opportunity for investors and the Canadian economy as a whole,” said Jos Schmitt, president & CEO of NEO, in a release.

“The G-Corp is a game-changing solution to turn that opportunity into reality. It is also a product of our relentless efforts to put Canadian capital markets at the forefront of innovation in such a way that benefits investors and capital-raising companies,” Schmitt said.

According to the release, Canaccord Genuity is working on bringing the first G-Corps to market.