The US SPAC (special purpose acquisition company) boom is coming to Europe, says Matthew Field in The Daily Telegraph. Also known as “blank-cheque companies”, SPACs are shell firms that list on the stockmarket in order to raise cash. They then use the money to merge with another company. SPACs provide an alternative route to a public stockmarket listing that can be more straightforward than the traditional initial public offering.
The latest SPAC boom started with Richard Branson’s Virgin Galactic space business, which went public through an $800m SPAC in 2019, says Field. Once confined to the US tech scene, European start-ups are now in the crosshairs too: UK electric-vehicle business Arrival is listing on the Nasdaq through a $660m SPAC. New SPAC vehicles are being launched in Frankfurt and Amsterdam.
SPACs allow business founders to bypass “sharp-suited investment bankers” on the way to a public listing, says The Economist. Yet while some SPACs are led by “excellent management teams”, many “don’t know the first thing” about the sectors they are investing in, says an unnamed investment banker. Around 250 SPACs launched last year in the States, raising $83bn. In January, “an average of five were created each working day”. The SPAC boom is a symptom of the “wider exuberance” currently gripping world markets.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
What happens if you can’t pay your tax bill, and what is "Time to Pay"?Millions are due to file their tax return this Friday as the self-assessment deadline closes. Though the nightmare is not over until you pay the taxman what you owe - or face a penalty. But what happens if you can't afford to pay HMRC your tax bill, and what is "Time to Pay"?
-
What does Rachel Reeves’s plan for growth mean for UK investors?Rachel Reeves says she is going “further and faster” to kickstart the UK economy, but investors are unlikely to be persuaded
-
What’s the outlook for the shipping industry in 2025?All we know for certain about the year ahead is that it will be volatile. But the container shipping sector thrives on choppy waters
-
What investors can expect from stocks and the economy in 2025There are reasons for investors to be hopeful about 2025, with slowing interest rates and moderating oil prices. But trouble may be brewing in bond markets
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
South Korean won hits 15-year low – what it means for 'Korea discount'After Yoon Suk Yeol's failure to declare martial law, South Korean markets are reeling, with the weakest won since 2009. Will this worsen the Korea discount?
