Equity Capital Markets

SPACs and a regulatory revamp

Rupert Walford, Head of Execution, European ECM


Will Europe get as caught up in the SPAC surge as the US has? Companies in Europe are waiting for regulatory change to pave the way for SPACs

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By Duncan Smith, Rupert Walford and Matthew Coakes
Published July 12, 2021 | 1 min watch
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Key Points

  • The US SPAC surge has seen some European companies de-SPAC in the US, but they haven’t all been success stories
  • The market for European-listed SPACs is significantly smaller than the US
  • Regulatory reform in the UK is aimed at making SPACs more attractive to London, and bringing in innovations from overseas that are often seen in the IPOs of tech firms

The SPAC surge in the US dominated equity capital markets headlines in 2020 and early 2021, but the European markets haven’t seen the same action. Given this imbalance, European companies seem more likely to be the targets of US SPACs and ultimately list in American venues via a De-SPAC rather than partner with a European SPAC. For some businesses, that can work, particularly when they’re a global company. But for others, that distance from homegrown investors could be a stumbling block as time goes on.

European firms also need to consider long-term value. While US SPACs are producing a lot of headlines for companies like Nikola and Lucid, the share price performances of companies that have partnered with SPACs have often been quite disappointing. There has been some SPAC issuance in Europe – but only 18 so far this year, mostly on continental markets like Amsterdam, Paris and Frankfurt. But London SPAC issuance may accelerate as the UK looks to reform its listing rules.

“This is aimed at encouraging UK-based tech companies to list here rather than overseas. If we can change the rules in the UK to make them on a level playing field with the US, then the UK becomes an attractive venue for listing those companies.”

Rupert Walford, Head of Execution, European ECM, RBC Capital Markets

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Not only does London have future SPACs in its sights, it’s also targeting some other overseas innovations, including dual class share structures and more flexible prospectus requirements. These reforms are aimed at levelling the regulatory playing field and keeping more companies from the UK, in the UK.

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