A change in stockmarket rules will benefit us all
The “SPAC” boom all the rage in the US is passing the UK’s stricter stockmarket by. A change in the rules would be good for everyone, says Merryn Somerset Webb.


On 1 March 2021 a new firm registered with the US Securities and Exchange Commission to list its shares. It is called Do It Again Corp. (yes, really) and has been formed “for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganisation or similar business combination with one or more businesses”. It is basically raising lots of cash to do – well, something – something you will find out about later.
If this reminds you of the (unverified) story of the company floated during the South Sea Bubble to carry out an undertaking “of great advantage but no one to know what it is”, you won’t be alone. There is much concern that a fully formed bubble in this kind of blank-cheque company, or SPAC (special purpose acquisition company), is under way in the US. They are, notes Jeremy Warner in The Daily Telegraph, “all the rage”. Last year $80bn was raised in the US (with around $3.4bn creamed off by investment bankers). This year we’ve already seen over 170 offerings, raising half that again.
It’s classic top-of-market stuff. No surprise then that it’s hard to find approving voices. Berkshire Hathaway’s Charlie Munger says the world would “be better off without” this kind of “crazy speculation”. Investing guru Jeremy Grantham has dismissed them as “thoroughly reprehensible” money-for-nothing schemes. They may both be right. If so, many people will be pleased that the UK’s listing rules just don’t work for SPACs – trading in their shares is suspended when they find something to buy, for example – so the boom has thus far bypassed us. But there is an important point to SPACs: they allow private firms to list quickly and easily (by merging with or being bought by the newly listed cash shell). The Financial Times reckons that’s a bad thing: “normal initial public offering (IPO) disclosure requirements... are in themselves designed to protect investors”. But it might actually be a very good thing.
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
One maddening aspect of the last decade has been the fall-off in the listing of new growth firms in the UK – a trend you can map against the rise of regulation around IPOs and the endless administration that goes with being listed. And one of the maddening things about this month has been watching some of our brilliant firms (eg, Babylon Health) talk of going to the US via a SPAC instead of listing here.
Lord Hill this week completed a government-commissioned review of UK listing rules and seems to be as frustrated as us. He recommends we “liberalise” the rules on SPACs; allow dual-class share structures (so founders can list but know they can keep some control); and cut the minimum free float (the percentage of shares that can be freely traded) from 25% to 15%. There are arguments against all these things, but the argument for them is better.
The public markets are vital to wealth creation. If we want all retail investors to have similar opportunities as professionals to buy into new, exciting growth companies (and we do), it is surely better to take the risks involved in making listing easier than those involved in the best firms not listing at all (or listing elsewhere). In his Budget this week the chancellor talked about making the UK the “best place in the world” for high-tech, innovative companies to operate and raise capital. Stockmarket reform will surely play a major part in that – to the long-term benefit of us all.
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
-
HMRC confirms crypto ETN ISA rules
With crypto ETNs now technically available for UK retail investors, HMRC has confirmed they can be held in an ISA – but there’s a complication
-
Pensioners targeted in fine wine scams – the tactics to watch for
Wine has emerged as the latest lure in investment fraud, with pensioners being specifically targeted by scammers
-
Pierre-Édouard Stérin wants to make France great again
Conservative billionaire Pierre-Édouard Stérin is seeking to lead a political and spiritual renaissance across the Channel. The planning looks meticulous
-
Global investors have overlooked the top innovators in emerging markets
Opinion Carlos Hardenberg, portfolio manager, Mobius Investment Trust, highlights three emerging market stocks where he’d put his money
-
Pinewood Technologies: a drive for growth
Pinewood Technologies’ platform is one of the best in the business. Investors should buy in
-
'EV maker Faraday Future will crash'
Faraday Future Intelligent Electric is failing dismally to live up to its name, says Matthew Partridge
-
Investors should cheer the coming nuclear summer
The US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with follies
The best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
A tale of two Reits – why performance matters for valuation
AEW UK and Regional are two Reits that are valued very differently, despite a shared focus on properties outside London
-
Healthcare stocks look cheap, but tread carefully
Shares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?