London eyes overhaul of stock-listing rules to cash on SPAC

The City has also lost out on share-trading to Amsterdam after Brexit, and many investors are now looking to the Netherlands as the future centre of SPACs in Europe

After falling behind New York and Amsterdam, London is eyeing a major overhaul of its stock-listing rules so it can cash in on the SPACs boom and reassert its financial power after Brexit.

A major review into the City of London has recommended the removal of a rule that deters special-purpose acquisition companies (SPAC) from listing in the UK's financial hub.

SPACs have continued to boom in 2021, with around 180 “blank-check” companies listing in the US already, raising more than $50 billion. The City has also lost out on share-trading to Amsterdam after Brexit, and many investors are now looking to the Netherlands as the future centre of SPACs in Europe.

London has been almost completely left out of SPAC phenomenon. This is in part due to a rule that says shares in the company must be suspended after it picks a target, which can leave investors with their cash locked up, even if they want to sell.

The report recommended the UK's financial authority remove this rule "and replace it with appropriate rules and guidance further to increase investor confidence in these companies."

Lord Hill, a former EU financial commissioner who chaired the review, said London needed to work on "closing a gap which has already opened up" between it and other global financial hubs.

Amsterdam is emerging as something of a SPAC centre, with LVMH boss Bernard Arnault backing a vehicle that plans to list there. According to Bloomberg, a former Commerzbank chief is also weighing a Netherlands listing. The review expressed concerns that some of the UK's fastest-growing companies could be poached by foreign SPACs and listed abroad.

Chancellor Rishi Sunak said: The UK is one of the best places in the world to start, grow and list a business - and we're determined to enhance this reputation now we've left the EU.

UK Finance, the UK's banking lobby group, said the proposals should "foster a more dynamic regulatory regime fit for the 21st century and the fast-growing innovative companies choosing to list in the UK."

The Hill review expressed some concerns about SPACs, including the way they are skewed towards big payouts to "sponsors" as well as concerns about their performance over time. Yet it said competitive pressures and the benefits of the model meant rule changes should be considered.