Watchdog Weighs SPAC Rule-Changes to Ramp Up London Listings

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The U.K.’s markets regulator has laid out proposed changes to its listing rules for special purpose acquisition companies as London looks to grab a greater share of the booming market.

Those blank-check firms that raise at least 200 million pounds ($278 million) and include an option for redemption may no longer be subject to suspended trading when the vehicle identifies an acquisition target, the Financial Conduct Authority said in a statement Friday. U.K. markets have been stymied by rules requiring the cash shells to pause trading in such an event to shield investors from price jolts while a deal is being completed.

“‘We are consulting on a set of clear conditions based on which we will not look to suspend the listing of a SPAC,” Clare Cole, director of market oversight at the FCA, said in the statement.

London has missed out on the boom for SPACs that has swept Wall Street, Amsterdam and beyond, with $83 billion raised last year alone. More recently, however, the market has faltered amid worries about a bubble.

The FCA said it would consult for four weeks on the proposals. Other rule changes detailed in the statement include:

  • ensuring monies raised from public shareholders are ring-fenced to either fund an acquisition or be returned to shareholders, less any amounts agreed to be used for the running costs of the SPAC
  • ensuring shareholder approval for any proposed acquisition, based on sufficient disclosure of key terms along with confirmation that terms are fair and reasonable if any SPAC directors have a conflict of interest relating to a target company
  • sufficient disclosures being provided to investors on key terms and risks from the SPAC IPO through to the announcement and conclusion of any reverse takeover deal

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