SPACs

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Broad reform to listing regimes, growing ESG scrutiny, and increasing retail participation in fundraisings are among the areas to watch.

By Chris Horton, James Inness, Anna Ngo, and Johannes Poon

Last year was memorable for UK equity capital markets (ECM). The IPO market was at its busiest since 2014, and we encountered innovative deal structures such as the emergence of special purpose acquisition companies (SPACs) in the UK, direct listings, and growing retail participation in fundraisings. In…

The revised criteria allow UK-listed SPACs to avoid a suspension of their shares when announcing a de-SPAC deal.

By Nicola Higgs, David Berman, Chris Horton, James Inness, Rob Moulton, Anna Ngo, and Charlotte Collins

The UK, acting through the Financial Conduct Authority (FCA), will implement a new SPAC listing regime from 10 August 2021. This follows a consultation launched in April 2021 on the back of recommendations made by Lord Hill in his review of the UK listing regime.

The new regime removes the presumed suspension of a SPAC’s shares upon announcement of a de-SPAC until a prospectus on the enlarged group is published, which has been one of the main reasons that most recent SPAC activity in Europe has taken place on one of the Euronext exchanges, principally Amsterdam and Paris, rather than in London.

ESMA warns against investor protection risks and provides guidance on expected disclosures.

By Nicola Higgs, Chris Horton, James Inness, Rob Moulton, Oliver Seiler, Isabella Porchia, and Charlotte Collins

On 15 July 2021, ESMA published a statement on the prospectus disclosure and investor protection issues raised by special purpose acquisition companies (SPACs). SPAC activity in the EU has increased significantly in recent months, but there is not a harmonised regulatory approach to SPAC transactions across the EU, partly because structures and approach will depend on what is permitted under national law. Therefore, ESMA intends to clarify regulatory expectations regarding SPACs so that potential investors are provided with clear, comprehensible, and comparable information when making their investment decisions.

ESMA’s guidance aims to ensure a coordinated approach across the EU, including expectations as to how issuers should satisfy the specific disclosure requirements of the Prospectus Regulation, and how SPAC shares and warrants should be considered under the MiFID II product governance regime.

Proposed changes to the UK Listing Rules would allow certain SPACs to avoid a listing suspension.

By Nicola Higgs and Charlotte Collins

On 30 April 2021, the FCA published a Consultation Paper (CP21/10) on changes to the UK Listing Rules to better accommodate special purpose acquisition companies (SPACs). Whilst currently there is a presumption that a listing should be suspended temporarily when a SPAC identifies a potential acquisition target, the FCA is proposing to introduce an exception if…