Are the ‘Spanish SPACs’ here to stay? | Legal

After two years of SPAC (acronym in English for company with a special purpose of acquisition) fever in the US, this new figure of investment begins its landing in Spain with the parliamentary processing of the Bill of the Securities Markets and the Investment Services published on September 12.

This constitutes an important step forward in the implementation of the Spanish SPACs and, surely, their parliamentary processing will be one of the issues that will capture the attention of private equity funds and investment banks in the coming months.

It is a reality that, currently, this new investment figure is in low hours. Wall Street data reflects a pause in creation since the second quarter of 2021. It has gone from an annual volume in 2021 of 539 to a total of 51 so far in 2022. This has been used by many to argue the alleged speculative nature of these special purpose acquisition companies or the puncture and near disappearance of these figures in the world of M&A.

And this if the regulator does not prevent it; Nothing is further from reality. In the first place, because the US data for the years 2020 and 2021 reflect a clear investor appetite for this type of figure. The volume of capital raised with these figures (more than 160 billion dollars) and the fact that, for the first time in history, SPACs in 2021 surpassed IPOs (initial public offerings) as mechanisms of IPOs, is a clear indication that this figure likes the market.

Second, for a factual issue. There are currently more than 500 American SPACs (with more than 100 billion dollars of capital) that are looking for a target. Therefore, it is difficult to think that this figure will not play an important role in the M&A market in 2022 and 2023. It is true that the number of SPACs that will probably be liquidated in the coming months for not finding a target will increase, Therefore, this market, like any other, will undergo a logical purification process marked by supply and demand.

The reasons why the creation of new companies has been stopped short are, mainly, the global macroeconomic context of rising rates and inflation and the regulatory uncertainty generated by the proposed new regulation of the SEC (Securities and Exchange Commission of the USA). USA).

Among the proposals of the American regulator, the regulation on conflicts of interest of the sponsors stands out, the responsibility that is intended to be transferred to the investment banks that participate in the creation of these companies and in the subsequent De-SPACing or the limitation to a term of 18 months to find target.

Investment banks or some sponsors, such as Goldman Sachs, have already publicly expressed their rejection of these proposals, warning of the impact that this would have on the market.

In the case of Spain, the parliamentary processing of the Securities Market Bill approved by the Government is an opportunity to create an alternative investment figure that is attractive to Spanish private equity.

It would be a mistake (as is happening in the US), an excess of regulation or that it focuses excessively on investors, forgetting the rest of the players in the game. Success, without a doubt, will depend on finding a balance, bearing in mind that, precisely, it is a figure that, in itself, offers more legal protection to investors than a traditional private equity fund (it grants them rights to speak and vote in operations, as well as a right to return your investment before De-SPACing).

Victor Artoladirector of the Corporate area of ‚Äč‚ÄčOntier


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