Blank-Check Frenzy Prompts Nasdaq Nordic to Set Up New Rules

Nasdaq Inc. is introducing new rules for blank-check IPOs on its northern European stock exchanges, in a bid to cash in on the SPAC frenzy gripping the U.S.

On Monday, Nasdaq Nordic will adopt 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, said in an interview, adding that Helsinki, Copenhagen and Reykjavik will follow suit “shortly.”

Initial public offerings by blank-check firms have been lacking in Europe, which saw only two such listings last year, even as a record $100 billion of these deals were announced in New York, data compiled by Bloomberg showed.

Under the exchanges’ new framework, trading in a SPAC’s shares won’t be halted once an acquisition is announced, so that investors can sell out of the stock if they don’t like the deal, setting it apart from London’s current model.

Nasdaq’s northern European arm is taking its new SPAC listings framework to a number of issuers and banks in its markets, and expects a handful of blank-check IPOs this year, Kostyal said. The Nordics’ first ever such offering is anticipated to raise between $100 million and $200 million in March, he said, without providing additional details.

Not all investors are thrilled by the idea of SPAC listings in the Nordics. Blank-check deals are “a peak bull market syndrome” and represent “a new generation of investors that are used to everything going up,” said Leif Eriksrod, head of equities at Norwegian fund Alfred Berg Kapitalforvaltning AS.

A spate of IPOs with big first-day price jumps, coupled with the record number of blank-check listings, have raised questions in the U.S. about frothy markets. Retail investors are piling in, with Reddit boards and a corner of TikTok lighting up with discussions about SPAC stocks. The trend shows no signs of slowing down in 2021.

During a previous blank-check boom in the early 2000s, London was Europe’s SPAC headquarters. This time around, it hasn’t had much success. Serial dealmaker Martin Franklin had planned to raise $750 million via Harvester Holdings in the City last year, but failed to drum up sufficient investor interest.

Rules in the U.K. are seen as a hurdle for SPAC listings, since investors are locked in as soon as a blank-check company makes a deal public. Traditionally, the only money-back option in London has been to wait out the two-year deadline if no acquisition is made and the vehicle is wound down.

Meanwhile, European entrepreneurs have largely taken their blank-check listings to New York to take advantage of its SPAC model and much deeper pool of capital. This includes Credit Suisse Group AG’s former Chief Executive Officer Tidjane Thiam.

Nasdaq Nordic has already lost at least one blank-check listing to New York: ByNordic Acquisition, which is looking to acquire a fintech business in northern Europe, filed in August to raise as much as $100 million in a U.S. IPO. The stock is yet to start trading.

©2021 Bloomberg L.P.

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