Keeping up with the neighbours? FCA consults on a new UK SPAC regime

Following Lord Hill’s UK Listing Review, which included recommendations to change the current special purpose acquisition companies (SPAC) regime, the FCA has published its proposals to amend the Listing Rules relating to SPACs (CP21/10).

The proposed guidance attempts to align the UK SPAC regime more closely with market practice in the US and elsewhere in Europe. Broadly speaking, the FCA appears to be seeking to facilitate the admission in London of SPACs with similar capital structures and contractual arrangements as those that are currently listing elsewhere.

However, unlike in the US and Europe, the FCA has proposed prescriptive guidance for SPACs. This is different to the US and Europe where market practice has been the driver for setting the “rules” for SPACs. As such, there must be a concern that even if these proposals are implemented, a sponsor looking to list a SPAC in London will arguably have less flexibility. There is also the risk that, should market practice change elsewhere, the UK model could quickly fall out of step.

Then again, the proposed regime will lend some comfort to the buy-side who have voiced concerns over the potential risks in investing in SPACs and have sought some regulatory oversight of their activities.

The consultation period for the new SPAC regime is only 4 weeks with the intention to have it in place by summer 2021.