Tech venture capital firm Hambro Perks has announced that it will be listing a shell company (SPAC) on the London Stock Exchange, aiming to raise £ 150million in the process.

In the UK financial scene, the move is seen as proof that the recently relaxed rules for SPACs are making the London stock exchange location more attractive.

Philip Plickert

Business correspondent based in London.

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Hambro Perks' SPAC (Special Purpose Acquisition Company) is scheduled to go public on January 7th and buy up a “unicorn”, a rapidly growing young company valued in billions, from the technology industry by spring 2022. SPACs have experienced a tremendous boom in recent years, but this has dried up somewhat since this spring. The special purpose vehicles are set up as “empty shells” and collect capital on the stock exchange in order to then look for a takeover target. The acquired company is merged with the shell and in this way brought to the stock exchange via the SPAC. Hambro Perks Acquisition Company (HPAC) will have fifteen months to finalize an acquisition. If this works, Hambro Perks collects up to a fifth of the takeover value;otherwise the equity investors get their capital back.

London as the technology capital of Europe

The British government has been trying for some time to make the stock exchange more attractive through new rules after Brexit.

According to a report by former EU Finance Commissioner Lord Jonathan Hill, some relaxed rules came into force in August.

You should secure a larger part of the lucrative cake for London with SPACs, most of which have so far gone to New York.

The first SPAC for London has therefore garnered attention in the UK financial press. Dominic Perks, chief executive officer of Hambro Perks, said the new rules that went into effect in August were "crucial" in determining the location of HPAC's stock exchange. They looked at the US stock exchange and also Amsterdam, but then voted for London. The changed rules would have opened the market there, said Perks. “We decided to go public with HPAC in London because it is the technology capital of Europe,” he added.

Even earlier there were shell companies on the local stock exchange, but these were much more strictly regulated.

Trading in the shares had to be suspended just at the crucial point in time when a takeover was announced.

Shareholders were tied their hands, they couldn't get out if they didn't like the takeover.

By far the leading center for SPACs has so far been New York, which has seen a real boom in these investment vehicles.

Since the beginning of 2020, nearly 800 SPACs have been placed on the New York Stock Exchange, according to data firm Dealogic, attracting approximately $ 230 billion in capital.

In Europe, Amsterdam is ahead with around a dozen SPACs IPOs, while Frankfurt only had a small single-digit number.

The boom peaked in the first quarter of 2021, when more than 30 new large SPACs went public every month in New York alone. But after that there was a strong setback for the market. In part, this was due to scandals with broken SPAC promises and stricter oversight; some investors also became more cautious, because the impression arose that it was primarily the first-time investors (sponsors and pipe investors) who achieved the large returns, while little was left for the small investors who joined the IPO.

Hambro Perks was founded in 2013 by the late banker Rupert Hambro.

The venture capital and investment company is already involved in more than a hundred, some of them well-known, tech companies.

These include the biotech start-up Gelesis, the geo-coding and navigation tech company What3words, Moneybox and Vedanta Biosciences.

Anthony Salz, a former partner of the law firm Freshfields Bruckhaus Deringer, will head HPAC.

Some of the larger UK unlisted companies such as air taxi builder Vertical Aerospace and asset manager Alvarium Investments have recently announced takeover deals with American SPACs.