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The EU needs to study the increase in SPACs



(Reuters) – The European Union must study the emergence of specialty companies, but it is too early to say if they are a "bubble", said the appointed managing director of EU Securities Watchdog ESMA on Thursday.

SPAC has begun to attract big names in the European economy, with former UniCredit chief Jean-Pierre Mustier together with France's richest man Bernard Arnault to launch a SPAC that will be listed in Amsterdam and aimed at European financial business.

Dubbed "Blankcheck" companies in the United States, SPAC has attracted billions of dollars in investments on Wall Street and their popularity has spread to Europe.

"They ask us in Europe what it means and whether we are comfortable with our existing rules," Natasha Cazenave told the European Parliament.

SPAC lists on a stock exchange to raise capital and then have up to two years to use the proceeds to buy existing companies.

They have become a popular alternative for start-ups that want to go public with less regulatory control than they would otherwise face with an IPO.

There have only been 1

0 SPAC lists in Europe 2020 and 2021, with a total value of about $ 1.3 billion – figures dwarfed by the United States where 522 such lists have brought in more than $ 300 billion, data from the end of March from Refinitiv show.

"We need to understand why they are so popular, why people provide money only on the basis of sponsor names and the announcement of a project," said Cazenave, who is currently the Deputy Secretary-General of the French a markets watchdog AMF. "19659002] a European perspective," said Cazenave. head of investment banking in Germany.

"One measure is likely to be that regulators will prohibit a SPAC from talking to other potential targets when they have agreed on exclusivity with another target to pursue a merger agreement," Baumann said.

Armin Heuberger, CEO of Swiss lender UBS in Germany, said he expects 30 to 60 SPAC listings in Europe this year. The UK is trying to attract SPAC to the list in London.

The US Securities and Exchange Commission (SEC) has launched an investigation into Wall Street's French for blank check acquisitions and is seeking information on how insurers handle the risks.

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