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It is not just US investors that are in on the action. German venture firm Lakestar has filed a Spac in Frankfurt.
Bernard Arnault, the chairman of LVMH and Europe’s richest man, has launched a firm in Amsterdam. Matt Gehl, co-head of European investment banking at JP Morgan, says: “The Spac is a real viable alternative [to a float]. We will see lots of momentum across Europe in 2021.”
‘This Spac will self-destruct in two years’
In London, however, things are more complicated. UK listing rules mean companies may have to suspend their shares if a Spac takeover is announced.
Xavier Rolet, the former chief executive of the London Stock Exchange, and Matthew Elliott, the co-founder of Vote Leave, wrote to the Government arguing Spacs could “realise considerable benefits to credible British and European entrepreneurs”. They urged a review of UK capital markets to look seriously at enabling such mergers.
But not everyone is convinced. “Suddenly, all anyone is hearing about is Spacs,” says Jean Tardy-Joubert, a partner at Highland Europe and founder of the European office of Qatalyst.
“They are pushing a number of companies to go public that are not ready.” He also questions why the US regulator, the Securities and Exchange Commission, has not pushed for more scrutiny.
He says while many Spacs file prospectuses with detailed CVs for their directors, some of those leading the charge “have never done a tech deal in their lives”.
Most Spacs have a two-year lifetime, after which they return money to investors. The fear is this creates a race to the bottom as investors rush to get deals done.
“Like something from Mission Impossible – this Spac will self-destruct in two years,” Tardy-Joubert says.
For now, the Spac attack shows no sign of slowing down, and the inboxes of Europe’s founders are filling up fast.
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