The City is not at all PSPC’s preferred stock exchange. In 2020, only 4 PSPCs took their first steps there, raising $ 4 billion, against 48 on Wall Street, where they raised more than $ 80 billion! The place of London clearly lacked attractiveness. But the situation could well change. The London Stock Exchange (LSE), following the recommendations of the report by Jonathan Hill, former European commissioner, has indeed changed its rules.
This should breathe new life into the market. Coming into force on August 10, this regulation offers greater flexibility to these empty shells whose sole purpose is to raise money to buy a company. It also offers better protection to investors.
Suspension of listing, a thorny issue
Main change, the thorny issue of suspension of listing has been resolved. PSPCs that raise at least £ 100 million when they go public will no longer have their shares suspended as soon as an acquisition target is announced, provided they meet a number of criteria promoting investor protection. .
This measure addresses the issue of investors stranded at the most important stage of a PSPC lifecycle. Until now, the latter could not access their capital at this stage. A point on which the LSE was much less saying than the other major stock exchanges.
To avoid this suspension of listing, the PSPCs must, in return, offer investors a “redemption” option so that they can opt out before the completion of an acquisition.
Shareholder approval is also required. However, when a transaction is well advanced, PSPCs can extend the timeframe for completing an acquisition by six months without seeking new shareholder approval.