Channel Islands introduce SPAC listing rules

New rules have been introduced in order to allow Special Purpose Acquisition Companies (SPACs) to be listed on the Channel Islands Securities Exchange (CISE).

SPACs, or blank check vehicles, involve gathering commitments from a group of investors with the goal of finding a single acquisition target within a specified time period. Once a target is identified, the investors usually vote to approve the transaction.

SPACs became popular in 2007 and 2008, but after the financial crisis, new SPAC formations ground to a halt as LPs dealt with liquidity problems and were unable to commit to new vehicles. SPACs are growing in popularity again as international markets recover from the crisis. In the US, firms like TPG Capital and Wilbur Ross have launched the vehicles in the past few years.

In response to this shift in the market, the CISE has launched specific rules, effective Monday, to introduce SPACs as a new product on the stock exchange. In order to list on the CISE, the SPAC must have a minimum market capitalization of £700,000 (€997,000; $1.06 million) and an acquisition must be made within 36 months. Listing on the CISE may be more attractive to private equity managers due to the fast document turnaround time, competitive pricing and low sponsor fees, according to law firm Ogier.

“The new SPAC rules have been designed to be commercially attractive for management teams and yet also offer robust integrity for investors, so we expect that this, combined with our competitive fee regime, will mean that they prove attractive in the marketplace,” said CISE chief executive Fiona Le Poidevin in a statement.

Although the rules have only just become effective, Poidevin added that the CISE has already received enquiries about launching SPACs.