Skip to main content
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
// //

Britain has eased rules for so-called special purpose acquisition companies (SPACs) to attract more listings to London, just as global regulators have put a watch on SPACs, which may already be peaking in popularity.

After a surge in activity in SPACs or “blank check” companies on Wall Street and more recently in the European Union and emerging markets, Britain is keen that London is not left behind.

SPACs list on an exchange and must use the proceeds to buy an existing or target company within a set time frame. This process provides a quicker route to a stock market listing as it sidesteps the lengthy process that leads to an initial public offering.

Story continues below advertisement

Under previous U.K. rules, shares in SPACs were suspended when a target company was identified, effectively trapping investors and putting them off participating in the U.K. market.

The Financial Conduct Authority in April had proposed an easing of the rules, waiving the suspension rule if a SPAC raised at least £200-million ($275.66-million) from its float.

On Tuesday, the watchdog cut this to £100-million in its final version of the rules.

“The final rules aim to provide more flexibility to larger SPACs, provided they embed certain features that promote investor protection and the smooth operation of our markets,” the FCA said in a statement.

To ensure investors are protected, the FCA also said that investors have redemption rights ahead of a proposed acquisition and a shareholder vote. The new rules come into effect on Aug. 10.

“The rules eliminate the damage unique to U.K. SPACs of investors being stuck,” said Charles Howarth, partner at CMS law firm. “The timing, however, is not ideal, given we are two years into a U.S. SPAC boom that many commentators feel already has too much money chasing too few viable targets.”

Earlier on Tuesday, the International Organization of Securities Commissions (IOSCO), which includes national regulators like the FCA and the U.S. Securities and Exchange Commission, said it has created a group to monitor SPACs.

Story continues below advertisement

“While SPACs may offer alternative sources of funding and provide opportunities for investors, they may also raise regulatory concerns,” IOSCO said in a statement.

LONDON PIPELINE

The EU’s European Securities and Markets Authority earlier this month set out detailed guidance on what SPACs should tell investors about risks, business strategy and criteria for selecting target companies.

In the United States, the SEC has ramped up an inquiry into blank check acquisitions, homing in on potential conflicts of interest created when banks act as underwriters and advisers on the same deal, sources have told Reuters.

While the SPAC frenzy has peaked in the United States, bankers told Reuters that they expect around 30-40 blank check vehicles to launch in Europe in the second half of the year, with up to 15 of them choosing London after the new rules come into effect.

SPAC veterans Chamath Palihapitiya and Ian Osborne are said to be looking at teaming up for a blank check foray in London, sources familiar with the situation said.

Several other private equity firms and corporates are also considering SPAC listings in London and elsewhere in Europe, bankers said.

Story continues below advertisement

“The FCA appears to have struck the right balance between protecting investors and making the London Stock Exchange more competitive,” said Delphine Currie, a partner at law firm Reed Smith. “Today’s announcement could be the moment that kick-starts SPAC listings in the U.K..”

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies