Analysis

New UK SPACs rules kick in

, Financial news

A fresh chapter for the UK begins today, as a new regime governing SPACs comes into force. In a bid to improve the overall attractiveness of listing the SPACs in London, the FCA is introducing updated rules reducing some of the regulatory burden on SPACs - provided they meet its requirements around investor protection.

SPACs will only have to raise a minimum of £100m at IPO as of today, down from a planned £200m. As long as investor funds are ringfenced and can be withdrawn at will, and investors get a vote on any merger deal, the SPAC will not have to automatically suspend trading once it finds its acquisition target.

Figures from S&P Global Market Intelligence show that SPACs raised some $16bn from IPOs across 110 transactions in the second quarter of 2021. While that was the fourth-largest quarterly volume of SPAC issuance over the last four-and-a-half years, it was a plunge of 82% from the quarter before.

“Ultimately, the coming months will demonstrate whether these new rules will effectively entice a new wave of SPAC investment activity in the UK and whether SPACs will emerge as the dominant force in the M&A space. If not, it might be less of a reflection of the regime’s effectiveness and more to do with a global SPAC cool off,” Merlin Piscitelli, chief revenue officer for Emea at Datasite, said.

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