Investment Strategies

Blank Check Companies Retain Momentum, Europe, UK Increasingly Active

Tom Burroughes Group Editor August 25, 2021

Blank Check Companies Retain Momentum, Europe, UK Increasingly Active

IQ-EQ, the investor services group, has a ringside seat for observing trends in the SPACs space. This news service asks it how the sector is evolving on both sides of the Atlantic.

(An earlier version of this article appeared on WealthBriefing, sister news service to this one. Given that SPACs have been mostly a US phenomenon, the editors think FWR readers will find these views interesting. As always, please feel free to comment. Email and

We have written articles about the burgeoning area of special purpose acquisition companies (SPACs), which have grown massively in the US over the past two years, and are showing signs of growth in Europe. SPACs are created with the purpose of merging with a private company within two years of the listing. A number of banks and financial serving high net worth and family office clients are active in the space, such as Citi Private Bank (see this interview here), and Vistra.

New UK rules for how UK-based SPACs operate took effect from August 10, with the express aim of boosting the sector. (See an article here about sector trends.)

IQ-EQ, the investor services group, has a ringside seat for observing trends in the SPACs space. This news service recently interviewed Pascal Rapallino, group investment structuring leader at the firm. 

What sort of work does IQ-EQ do in the SPACS area and how has this work changed and evolved? 
With our global presence and professional specialists across multiple areas of the investment ecosystem, we support SPAC sponsors at different stages of this process. We provide support mainly on the administration, corporate secretarial and accounting side of things for private equity firms and SPAC sponsors. Our teams have seen an increase in the use of SPACs by our clients, and have recently been privileged to support Pegasus Europe, the largest European SPAC to date. 

What predictions would you make about the growth of the SPAC market in the UK/continental Europe? 
Even as the SEC has issued cautionary statements about SPACs on financial reporting and audit considerations as well as on the rise in over-valued targets in the de-SPAC process, the fact remains that with more than $166 billion in escrow (and another $59 billion in pre-IPO funding, according to SPAC Research), SPACs, it would appear, are around for the foreseeable future.

Whilst the US has so far led the charge in the SPAC space, the UK and Europe have become increasingly active in this area. To illustrate the growing popularity of SPACs in these jurisdictions, Amsterdam for example has set up six SPACs since the start of 2021 and Luxembourg has set up three over the same period. 

In what ways does the market in the UK and Europe differ from that of the US?
Globally, SPACs have raised nearly $100 billion from IPOs in the first quarter of 2021, already surpassing all of 2020, according to financial data provider Refinitiv. 

Currently, the SPAC market in the US is more mature than in the UK and Europe with SPACs representing about 60 per cent of all IPOs in 2020. 

However, jurisdictions such as The Netherlands, the UK and Luxembourg are all adapting their listing rules to become more attractive to investors. 

What in your view should happen in the regulations of SPACs in Europe/UK to give the market more growth? 
The FCA recently published the final rules and changes to its Listing Rules for SPACs, which now allow investors to exit prior to an acquisition being completed. Previously, in the UK, a SPAC listing was suspended if it identified an acquisition target. This meant that investors were locked into a SPAC as soon as a target was announced, making them a less desirable investment route for UK investors. The new rules came into effect on August 10, 2021.

In addition to investors being allowed to exit before an acquisition is complete, further disclosures, such as ensuring that money raised from public shareholders is ring-fenced and rules requiring shareholder approval for any proposed acquisition have come into force.  

These changes will not only be welcomed by the UK investment community, but could result in SPACs growing in popularity as it becomes a more competitive hub for SPAC listings.  

There has been a bit of talk from the SEC in the US about controlling certain aspects of the market; talk about handling conflicts of interest, etc. Does the rapid growth of the market, and concerns about a possible "bubble," give you any causes for concern? When talking to clients, do you raise issues about what expectations are realistic?
In the US, the Securities and Exchange Commission (SEC) took great pains to call out the potential regulatory risks of SPACs - which do merit close attention from PE fund managers interested in sponsoring a SPAC. 

Do you think SPACs are changing the ways in which firms' owners get "exits," such as providing an alternative to private equity buyouts, etc? 
As with any route to liquidity, whether it be a funding round, IPO, acquisition or otherwise, SPACs can be the right alternative for certain businesses. The same fundamental rules of investment apply, both for the business being acquired by a SPAC, and for investors weighing their options: have a clear strategy and vision for what success looks like, experienced management, and goal alignment between investors and the SPAC sponsors

With the right combination, SPACs can be an excellent exit strategy for PE firms, and should be considered as another potential pathway for consideration on the road to liquidity.

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