A new plan from U.K. leaders would let special purpose acquisition companies (SPACs) join the U.K. stock market as part of a set of new reforms, which are intended to bolster London’s reputation in the aftermath of Brexit, Bloomberg reported.
In addition, company founders will be able to exert greater control when listing their businesses in the city, according to a state-backed report published Tuesday (March 2), per Bloomberg.
Chancellor of the Exchequer Rishi Sunak said the government wants to act quickly and boost the perception of the city. In a statement ahead of his annual budget, he said the goal is to “enhance this reputation” now that the U.K. has left the EU, according to Bloomberg.
The new proposals will see the U.K. removing some investor protection to help boost the “dormant” market for SPACs, Bloomberg reported. In general, London requires those companies to suspend their shares once they’ve found a business to acquire. That way, investors are shielded from the price spikes as the deals are finished.
In addition, London plans to introduce dual class share ownership to help founders keep more voting power, as U.S. tech giants like Facebook have done, according to Bloomberg. The rights would expire after five years, and there would be other limitations in order to meet stricter corporate standards.
And, London plans to cut the amount of equity a company has to sell to outsiders to 15 percent, while businesses now have to do 25 percent to be eligible for a “premium” listing, Bloomberg reported.
The rise of SPACs could be a global trend, which the U.K.’s interest shows, although there are some key differences, including that U.S. investors can propose to approve the SPAC acquisition or redeem their funds if they don’t, which European ones can’t do right now. That could be why there were no SPAC deals in Europe last year. In the U.S., SPAC deals doubled year over year in 2020.
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