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EU wants to check rise of SPACs, says ESMA exec candidate By Reuters 

© Reuters. FILE PHOTO: European Union flags flutter exterior the European Fee headquarters in Brussels

By Huw Jones

LONDON (Reuters) – The European Union wants to check the rise of particular goal acquisition firms (SPACs) however it’s too early to say if they’re a “bubble”, the chief director designate for EU securities watchdog ESMA mentioned on Thursday.

SPACs have begun attracting huge names in European finance, with former UniCredit boss Jean-Pierre Mustier teaming up with France’s richest man Bernard Arnault to launch a SPAC that will probably be listed in Amsterdam and aimed toward European monetary offers.

Dubbed “clean examine” firms in the USA, SPACs have attracted billions of {dollars} in funding on Wall Road and their reputation has spilled over into Europe.

“They beg the query for us in Europe, what which means and whether or not we’re snug with our current guidelines,” Natasha Cazenave instructed the European Parliament.

SPACs listing on a inventory trade to boost capital after which have as much as two years to make use of the proceeds to purchase current firms.

They’ve develop into a preferred various for startups eager to go public with much less regulatory scrutiny than they might in any other case face with an IPO.

There have solely been 10 SPAC listings in Europe in 2020 and 2021, with a complete worth of about $1.3 billion – figures dwarfed by the USA the place 522 such listings have introduced in over $300 billion, end-March information from Refinitiv exhibits.

“We have to perceive why they’re so widespread, why do individuals present cash simply on the idea of the sponsors’ names and announcement of a challenge,” mentioned Cazenave, who’s at present deputy secretary basic of French markets watchdog AMF.

“It is too quickly to make a willpower… and what needs to be the suitable response from a European perspective,” Cazenave mentioned.

Britain’s Monetary Conduct Authority has mentioned it can seek the advice of on rule modifications for SPACs as Britain tries to draw SPACs to listing in London.

The U.S. securities regulator SEC has opened an inquiry into Wall Road’s clean examine acquisition frenzy and is in search of data on how underwriters are managing the dangers concerned.

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