Special-purpose acquisition companies are going global.
Born and for the most part raised in the United States, special purpose acquisition companies (SPACs) seem unstoppable. SPAC volumes globally have already surpassed $100 billion this year. Yet, new US government rulings on SPACs—with more under consideration—have slowed their growth there: March and February saw 223 SPAC deals; April and May only 26.
Still, their success now has other countries offering their own versions, opening new public markets where the concept of a “blank check” company is still relatively fresh and the details under consideration.
Israel, as a hotbed of technological development and innovation, is a ripe market. Many US SPAC targets have been fast-growth tech companies. Hence, the Israel Securities Authority last month adopted rules that allow local companies to go public on the Tel Aviv Stock Exchange via a SPAC structure.
Israeli regulations require a minimum of 70% participation by institutional investors and require SPAC sponsors to put in at least $12 million of their own money. Additionally, investors who later vote against acquiring the target company will be able to get their money back. Already, several sponsor groups have expressed interest.
In Europe, SPACs have not been as popular to date, maxing out in 2017 at 13 IPOs worth $4 billion. Last year, there were just three, according to Refinitiv. But already this year there have been nine, and he UK is looking into eliminating some restrictions that have hindered SPACs there, such as certain investor rights.
In addition to new regulations that allow blank-check companies, several regions started to attract local SPACs for non-US assets. In the past, European or Latin American investment groups floated SPACs in the US and almost 75% of all SPACs were American, nowadays those investors are looking for local listings to better connect with potential acquisition target companies on the ground.
Tikehau Capital, a European fund, raised €500 million (about $607 million) in April 2021. Hedosophia European Growth raised €400 million in Amsterdam, where the stock exchange offers a similar SPAC structure to the US.