Britain’s financial watchdog revised rules for blank-check firms in a bid to attract listings, even as the boom in the market begins to falter.
The Financial Conduct Authority confirmed Tuesday, July 27, it will no longer require special purpose acquisition companies, or SPACs, to suspend their listing when they reveal their deal plans -- removing one of the roadblocks that kept London out of the fundraising rush last year.
The regulator also announced minor changes to its reforms, which were proposed in April, after a consultation with the industry. The tweaks include:
- Cutting the amount a SPAC would need to raise at initial listing to be exempt from suspension rules to 100 million pounds ($188 million) from 200 million pounds
- Giving some SPACs an extra six months to complete “well-advanced” reverse takeovers, in addition to the two years previously proposed
- Offering more guidance to SPACs prior to listing on whether they will be allowed to avoid suspension.
The FCA said the shift would provide more flexibility to larger SPACs, which it called an investment opportunity for UK markets and an alternative funding source for private companies that don’t wish to go public on their own.
Previously, these cash shells were forced to pause trading once they found a business to acquire, to shield investors from price jolts until the deal was done.
While the FCA said these companies “are likely to remain a modest feature of UK markets overall, any increase in appropriate opportunities for investors and issuers to access UK capital markets is positive.”
After the SPAC boom swept Wall Street, Amsterdam and beyond over the last year, the market has declined in recent months amid worries about a bubble. The IPOX SPAC index, which tracks listed companies, has fallen by more than a quarter since its February high.
Photo by Robert Bye on Unsplash
