Finance

Digital broker eToro delays $10.4bn Spac listing until end of the year

Commission-free stock broker eToro said its Wall Street debut will be delayed because of regulatory hurdles for special purpose acquisition companies.

EToro now expects to go public in the fourth quarter of this year, Financial News can reveal, as part of a merger with a with prolific investor Betsy Cohen’s Fintech Acquisition Corp.

The firms said in March that they had expected to merge in the third quarter, valuing eToro at $10.4bn.

A spokesperson for eToro blamed regulators’ backlog in approving Spac listings for the delay, having already publicly filed its F-4 form and entered “the final stages of comments” on its application.

“As you have likely seen, all Spac transactions have been taking longer to obtain final SEC approval, particularly in the fintech space — we are obviously not immune to this,” the spokesperson said in an emailed 20 September statement.

READ EToro boss: Time for regulators to embrace the Spac boom

Once approved, the Spac merger must be voted upon by shareholders in the Spac and finalised. The spokesperson said this is expected to take around a month to complete.

“Given this timeline and where we are today, we wanted to be transparent with the market that a 3Q closing is all but impossible at this point,” they added.

Spacs experienced a boom at the start of the year, raising $88bn in the first three months according to data from S&P Global Market Intelligence. Activity later cooled rapidly and blank-cheque deals plunged 82% in the second quarter amid increased regulatory sensitivity over transparency.

In April, the SEC updated its requirements for companies seeking to go public via a Spac. The changes — which said warrants issued as part of the fundraising should be treated as a liability instead of equity in financial accounts — sought to make the financial reporting of companies involved in a Spac listing more transparent.

EToro’s vehicle was one of a number of Spacs forced to restate its financials following the April update, though the company told FN in July that it was still on track to complete its merger within the promised timeframe.

READ Short-seller Carson Block on Spacs: ‘The incentives are all wrong’

EToro posted a net loss of $89m in the second quarter, primarily due to spending $71m in stock-based compensation for its staff and $36m in costs related to its upcoming merger.

The digital trading firm reported 2.6 million new registered users between April and June, slowing from growth of 3 million new users in the first quarter of 2021. The firm’s figures were still much higher than in 2020, boosted by people building up savings during the coronavirus pandemic and and increased attention on new areas such as cryptocurrencies.

To contact the author of this story with feedback or news, email Emily Nicolle

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