First SPAC in Europe’s Rich North Has Bankers Lining Up for More

The bank behind Scandinavia’s first special purpose acquisition company is now building out its corporate finance unit, with headcount set to grow by as much as 10%.

SEB AB is the sole global coordinator and bookrunner on the debut SPAC, which is due to go public in Stockholm on March 25. The deal, announced by investment firm Bure AB last week, comes as SPACs enjoy exponential growth in the U.S. There are signs, however, that sentiment toward the construction might be cooling, with the IPOX SPAC index down about 15% from a mid-February peak.

Per Thurezon, the managing director of SEB’s corporate finance unit, says he’s not expecting Scandinavia to embrace SPACs as enthusiastically as the U.S. has. But he does expect more such investment constructions in the region, and even hinted something may be announced “shortly.”

Jan Olsson, the chief executive of the Nordic unit of Deutsche Bank AG, told Bloomberg his “expectation is that SPACs are here to stay and European and Swedish investors will see the merits of the new and unique capital raising method.” He says he thinks “U.S.-style SPACs are also possible in Sweden.”

“We are working on SPACs in the Nordic region,” Olsson said. “We view the prevalence of private TMT and health-care companies as well as the ESG focus as an ideal environment to launch SPACs and then merge with quality companies. Sweden and the Nordic region tick all boxes.”

Adding Headcount

If SPACs do catch on in Europe’s cash-rich north, “then of course we would need to think about how to manage that and perhaps increase the number of employees,” SEB’s Thurezon said in an interview.

SEB will “try to expand irrespective of whether the new employees would work with SPACs or other things,” Thurezon said. The bank is looking to add 5-10% to the 40-person unit, he said.

SPACs, also known as blank-check initial public offerings, got a Nordic boost earlier this year when Nasdaq Inc. adopted a new set of rules to bring its exchange in Stockholm closer in line with the U.S. model for such listings. Adam Kostyal, head of European listings at Nasdaq, told Bloomberg that the Bure SPAC has “so far exceeded expectations in term of the market response and interest.” He also said Nasdaq is already working on more.

“The next SPAC that we are working with has a more international flavor to it,” Kostyal said. “We are seeing a buildup of interest in the market.”

Bure, together with SEB, has already brought in about 60% of the financing it needs for its SPAC, dubbed ACQ, after some of Sweden’s biggest pension funds lined up to participate in the deal. The first day of trading after the deal was announced, Bure’s shares jumped more than 8%.

The Retail Pitch

Bure intends for its SPAC also to be open to retail investors, and has hired Avanza to help it market the product. The broker says bringing in regular investors represents a movement it says speaks to the “democratization of capital.”

“Many IPOs and larger capital-markets transactions are institutional in character, which means that the lion share of each offering is pre-placed and filled with institutional capital,” said Pauline Holst Blomqvist, head of corporate finance at Avanza. “As such, the general public is largely excluded from partaking in these transactions.”

Avanza takes “great pride in being able to offer our investors as well as the general public” a piece of the SPAC action “on equal terms with institutional capital,” Holst Blomqvist said.

Bure and SEB say the Swedish SPAC model will be different from that in the U.S., most notably in that it will have a longer lock-up period (investors are giving Bure three years to find an acquisition target, compared to the standard two in the U.S.).

The institutional investors lining up for Bure’s SPAC say they’re making a long-term commitment that has little to do with the current low interest-rate climate. Bure has said it plans to generate about 3.5 billion kronor ($411 million), which it wants to use for acquisitions that have an enterprise value of 3 billion kronor to 7 billion kronor.

“Now that the structure with acquisition companies is coming to the Stockholm Stock Exchange, we as a major player also have a responsibility to establish a more investor-friendly practice, which we believe ACQ is,” said Tobias Fransson, head of sustainability at Swedish pension fund AP4.

At Bure, the plan is that whatever gets acquired through the SPAC “is going to be a long-term holding in the Bure portfolio, after we de-SPAC,” CEO Henrik Blomquist said in an interview. “So we see this in a perspective of 5-10 years or more. It’s not just about doing a quick exit.”

©2021 Bloomberg L.P.

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