2020 has seen no UK SPACs launched, while US activity has never been higher. UK SPACs on London's Main Market have some advantages over US SPACs, including no timing requirement post IPO to acquire a target and no shareholder approval of the acquisition.
This deal certainty allows the UK SPAC to:
- Be more agile in its execution of deals
- More easily raise any required acquisition finance
- Make a more attractive offer for a target, particularly in an auction
- Resist any requirement for a break fee
But is the lack of shareholder influence perceived as a disadvantage? The SPAC's acquisition will likely be a "reverse takeover" of the target potentially setting off suspension, cancellation and re-listing processes. Those processes will impact investors' ability to liquidate their shares if they don't like the deal. Investors also are unlikely to have the ability to redeem their shares if they don’t like the deal. The trade off against increased deal certainty appears to be that the lack of shareholder influence results in less demand for SPAC shares both on IPO and when traded in the market.
The LSE is reported to be reviewing changes to its market rules to facilitate SPAC listings.
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