In November 2015, the Channel Islands Securities Exchange
(CISE) introduced a new chapter to its listing
rules to permit special purpose acquisition companies
(SPACs) to list on CISE.
Whilst Jersey and Guernsey are no strangers to SPACs,
historically SPACs have utilised the Channels Islands as a
jurisdiction to domicile whilst seeking a listing on a large market
such as the London Stock Exchange or AIM, the ability now to list
SPACs on the CISE is a development which creates an interesting
opportunity for SPAC sponsors, particular smaller sponsors for whom
the cost of listing on a market such as the London Stock Exchange
may represent a deterrent impeding their ability to getting their
SPAC off the ground.
With the Channel Islands expertise in the private equity sector
generally, the ability now to list SPACs on CISE is a useful
addition to the islands' suit of products in this sector.
For the uninitiated, a SPAC is used to raise money via an initial
public offering (IPO) in order to search the
market for a specific acquisition. In recent years equity
capital markets have seen a resurgence in the numbers and size of
SPACs coming to market to facilitate the participation of investors
in private equity investment opportunities.
A number of factors have assisted the resurgence of SPACs,
including market conditions for fund raising in the equity capital
markets, a return in confidence among investors to deploy their
capital for investments, and investors keen to gain exposure to
private equity investment opportunities for their investment
Among noteworthy recent SPACs, Texas Pacific Group recently
raised US$460m on the IPO of Pace Holdings Corp on NASDAQ; Wilber
Ross raised US$460m on the IPO of WL Ross Holding Corp on NASDAQ;
Nicolas Berggruen's Ł900m SPAC, Justice Holdings Limited,
listed in London and subsequently acquired 29% of Burger King
Worldwide, Inc.; Bob Diamond's US$325m SPAC Atlas Mara Co-Nvest
Ltd, listed in London and subsequently acquired banking interests
in Africa, and Nomad Holdings Limited which raised US$500m on its
IPO in London and subsequently acquired Iglo Food Holdings
One of key attractions for investors investing in SPACs is their
listed company status. Once listed the SPAC's shares will be
freely transferable and liquid, enabling investors to exit their
investment by selling their shares in the market. Another
attraction is the "money back" feature of SPACs, which
provides an important protection for shareholders and for some
investors, particularly hedge funds, is a clear
For promoters and sponsors, using a SPAC has a number of
advantages over other forms of private equity investment vehicles.
The range of investors able to invest in a listed SPAC will likely
be much greater than that available to private equity or other fund
structures. The ability to offer sellers of a target business
shares in a listed company as part of any consideration package, is
another advantage. While SPACs sometimes resemble investment fund
structures, the costs associated with establishing and maintaining
a SPAC structure are generally lower than those applicable to
establishing and maintaining a formal private equity fund structure
and, aside from needing to comply with the rules of the stock
exchange upon which its shares are listed, with the added benefit
of the SPAC itself not needing to be regulated as a fund.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).