The UK's capital should do more to attract blank-check companies post-Brexit, lest rival financial centers like Amsterdam draw away potential business, the former head of the London Stock Exchange said.
The comments appeared in a paper that ex-LSE CEO Xavier Rolet co-authored with Shore Capital's head of research, Clive Black, and the co-founder of the pro-Brexit Vote Leave campaign, Matthew Elliott. The paper, which was submitted to a government review of the UK's listing rules, said the government needed to "promptly consider the SPAC revolution," whereby more special-purpose acquisition vehicles are raising money, listing on an exchange and buying companies to take public.
"We see [the review] as a golden opportunity," they wrote, adding that changing the rules to allow companies to make forward-looking statements in SPAC transactions could draw significant business to the UK and grab some of the trade going to New York and Amsterdam.
So far, SPAC activity in the UK and Europe has been negligible when compared to the US, with just €1.9 billion (around $2.3 billion) raised by European vehicles last year versus $56.5 billion in the US, according to PitchBook data. But that is changing, and Rolet is part of the shift: In December it was revealed via an SEC filing that he is the director of Golden Falcon Acquisition Corp, a SPAC led by former Barclays banker Makram Azar that plans to list in New York and is looking to raise $250 million to target a technology company in Europe.
Already this year there are several SPACs either looking to file in Europe or go public in the US with a view to targeting European investments. Recent examples include French asset manager Tikehau Capital's new vehicle that it is launching alongside LVMH head Bernard Arnault, UK tech founder Michael Tobin's SPAC set to be listed in Amsterdam, and Lakestar founder Klaus Hommels' €275 million SPAC going public in Frankfurt.
However, SPACs are just one area of focus for the government's Future Regulatory Framework Review, which is looking at wider reform of the country's financial services regulations post-Brexit. The review is also looking at allowing dual-class share structures to give founders more say over their companies upon listing and thereby enticing more tech companies to go public in London. The consultation period for the review ended on Feb. 19. The government will then consider the responses and use them to inform the second consultation in the first half of this year which will set out more detail on the proposed changes.