Listings review author Lord Hill says it would be ‘a very big call’ for UK to ignore Spacs market

The author of a review of the UK’s listings regime that recommended relaxing rules around blank cheque companies said it would be a “very big call” for the UK not to participate in the booming market.

Lord Hill’s government-sponsored review this month recommended removing a key rule that makes the UK an unattractive place to list the special purpose acquisition companies, which have taken the US by storm in the last 18 months.

“If we think that in some evolved form they are going to be a permanent part of the landscape in the US elsewhere in Europe, it is a very big call by the UK to say we do not ever want to be part of this process,” he said.

READ Why London ‘needs to move quickly’ to become Europe’s Spac hotspot

“We might have woken up in a few years’ time and thought, ‘oh dear, the UK has just missed out on this thing, which is permanent, and is settled down into a steady state, offering companies an alternative to IPO and the UK has decided not to be part of it,’ and I thought that would have been a very big call,” he said, speaking on a webinar hosted by the Centre for Policy Studies on 25 March.

Spacs raise money on public markets with the object of then merging with private companies to take them public.

Hill’s review recommended lifting a rule that means Spacs are likely to have to suspend trading once they have acquired a merger target, a rule that bankers and lawyers say makes the UK an unattractive place to list the so-called blank cheque companies.

The Financial Conduct Authority official responsible for responding to Hill’s review told the same webinar that the regulator was planning on publishing a consultation document “fairly soon” on potential changes to the listing rules.

READ Shake-up of City listing rules set to boost London amid Spac boom

“At the moment we are drawing up a set of recommendations and anticipate the consultation paper coming out fairly soon, we are really keen to respond at pace to some of those changes,” Clare Cole, the FCA’s director of market oversight, said.

“The areas of immediate focus for us are going to be free float, dual-class share structures, and the much discussed, special purpose acquisition companies, and we are treating those responses as a priority,” she added.

Globally, more than $94.4bn has been raised via Spacs already this year, more than in the whole of 2020, according to data provider Dealogic. The US is by far and away the dominant global market for Spacs, but European financial centres such as Amsterdam, Paris and Frankfurt are leading the race to list Spacs on this side of the pond.

Hill said he was not a “cheerleader for Spacs” and said he recognised concerns that the market could be overheated. 

“I completely recognise that people have proper points about the bubble, about safeguards around it…redemption rights, all of that, and those points are well made,” the former EU Commissioner for financial services said.

“Investors — ultimately —  can take a view as to whether it is something they want to invest in or not,” he added. 

To contact the author of this story with feedback or news, email James Booth

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