Toronto-based stock market Neo Exchange has launched a pilot program in which it will offer listings for a new kind of publicly traded acquisition corporation called a growth-acquisition corporation, or G-Corp. Here’s what you need to know:

Building on SPAC success: The G-Corp builds on Neo’s special-purpose acquisition company (SPAC) program. Like a SPAC, a G-Corp is intended to let a group of investors form a company, raising money via the capital markets that it uses to acquire another private company or companies, which will then go public. A SPAC craze hit the U.S. markets last year, and Neo bills itself as “the leading Canadian venue” for them. To date, it’s seen 10 such listings, raising a total of more than $2.4 billion. 

“We took all the strengths that make a SPAC a high-quality vehicle—a clean vehicle, a vehicle that is reliable for investors—and then we made a couple of changes to it,” said Jos Schmitt, Neo Group co-founder and CEO, in an interview with The Logic ahead of the announcement. One such difference is that G-Corp founders must purchase a certain number of securities.

The Goldilocks zone: The G-Corp is intended to fill the space in the market between a capital-pool company (CPC) and a SPAC. A CPC typically raises about $500,000 in capital, while a SPAC goes much higher, usually around $270 million, according to the exchange. A G-Corp will bring in an estimated $10 million. They then use these funds to target private companies for acquisition. A CPC will look for companies with an enterprise value of below $30 million, while a SPAC aims for those above $500 million. Again, a G-Corp falls in the middle, seeking companies valued at $30 million to $500 million.

The basics: The G-Corp will require an initial public offering of at least $2 million—all of which must be held in escrow and returned to investors if no qualifying transaction occurs—and a qualifying transaction (a deal to acquire another company) must be identified within 24 months and completed within 27 months. The resulting issuer must have a minimum $30-million market capitalization and meet the Neo’s initial listing standards.

No redemption: Unlike a SPAC, the new vehicle prevents investors from redeeming their funds if they don’t like the qualifying transaction. However, the G-Corp’s transaction is subject to shareholder approval. 

Filling a gap: Neo designed the G-Corp in-house, and is not aware of similar vehicles used elsewhere. “We think that we add something because we are filling a void in the market—a void that, today, is not being addressed by anyone else,” said Schmitt.

Two test cases: A number of early adopters are in the process of listing G-Corps, according to the exchange, including Canaccord Genuity and Wildeboer Dellelce. The first two will be Canaccord Genuity G Ventures and WD Growth I.