Wednesday 31 March 2021 7:34 am

City watchdog to consult on changing listing rules for SPACs

The City regulator has announced it will launch a consultation on changes to London’s listing rules to provide more investor protection in blank-cheque vehicles.

The Financial Conduct Authority (FCA) today said it will consider introducing a minimum market capitalisation and redemption option for investors.

“Our proposals will help to ensure that SPACs operate within a framework of high regulatory standards and oversight,” the regulator said in a statement.

As part of a wider review into listing rules published earlier this month, Lord Hill recommended current SPAC rules where vehicles may have to suspend trading when a deal is announced, be liberalised.  

Today the FCA said it would consult on this: “Where such protections are in place, we consider that the existing presumption of suspension of the listing for such companies at the point of announcement of an acquisition target is no longer required.”

Special-acquisition companies (SPACs) have risen to prominence during the pandemic in the US and parts of Europe.

They raise capital through a public listing with the purpose of acquiring an existing company. They’re often considered an alternative to an IPO and offer private companies a faster and more predictable way to go public. 

Last week WeWork announced plans to merge with Spac BowX Acquisition while London electric vehicle startup Arrival made its debut on the New York stock exchange.

The SPAC trend has. not taken off in the same way in Europe and there have been concerns that the UK could lose some of its most promising startups to US SPACs.

Separately the Singapore Exchange has today proposed the introduction of regulations this year to allow SPAC listings.