Special Purpose Acquisition Companies, otherwise known as SPACs, have seen intense investor interest in the past year. Now some major players in the UK financial markets are calling for a similar setup to take place on the London Stock Exchange. This could bring a much-needed boost to the UK capital markets.

A SPAC allows a company to go public in a reverse merger process that reduces the regulatory scrutiny of a traditional IPO. According to the NASDAQ SPACs make up most of the growth in the US IPO market in 2020, compared with 2019. By late December, in the US, SPACs had raised $79.87 billion in gross proceeds from 237 mergers. This far and away surpassed the 2019 record of $13.6 billion raised from 59 IPOs. In 2020, the average IPO size was $337 million.

Some reports claim Amsterdam is getting set to win the European financial capital crown from London. Amsterdam has more flexible listing rules than London and that’s helping it attract these blank-cheque companies. In December Reuters reported around 10 SPACs pencilled in for European launches in 2021. These are mainly centred around healthcare, technology and consumer focussed sectors. And they have a fundraise target of around $300 million each.


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Source: Value The Market

By Scott Atkinson