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Amsterdam gears up for SPAC boom

11 March 2021

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The SPAC revolution is fully underway, and the Dutch capital could be the market to watch in 2021. Two of our experts in the Netherlands – Daniël Vijselaar, Senior Client Director, and Jaap Veerman, Director Escrow Solutions – tell us more.

Amsterdam’s Euronext stock exchange is fast becoming Europe’s prime spot for special purpose acquisition companies (SPACs). Dealmakers and European bankers find The Netherlands’ flexible listing rules – and highly experienced financial and legal advisers – are ideal for SPACs.

Four SPACs have been listed in Amsterdam between 2020 and the time of writing. Intertrust Group handled three of these, the latest of which was ESG Core Investments. This was Amsterdam’s first listing for 2021 and Euronext’s first ESG-based SPAC.

The €250 million offering is sponsored by Netherlands-based Infestos Sustainability. The SPAC will focus on sustainable opportunities in north-west Europe.

Timing could not be better. The European Union’s Sustainable Finance Disclosure Regulation comes into effect in March 2021. This will require periodic reporting for investment management firms at the product and manager level.

A European SPAC boom

We expect larger SPAC fundraisings in the US and Europe in 2021, as demand rises from institutional investors who did not access emerging managers the first time around – but who now see the various benefits that SPACs can offer.

In 2020, 248 SPACs listed worldwide, raising $83 billion, with an average size of $335 million. This was four times the number of SPAC IPOs in 2019, while 155 SPACs have filed for IPOs around the world so far this year. Some 159 previously listed SPACs are still seeking a partner company. That means 314 SPACs are competing for deal flow.

Competition can only increase now Europe has joined the party. Everything points to a European SPAC boom as:

  • more Europe-focused SPACs and teams come to market
  • serial sponsors raise successive SPACs
  • the market has an excess of dry powder to be put to use
  • New York SPACs target listed European companies.

All the big names are there. LVHM founder Bernard Arnault and former UniCredit chief Jean Pierre Mustier are partnering to create a $250 million European financial SPAC, Pegasus Europe. Listed in Amsterdam, it will be co-run by former Bank of America deal architect Diego De Giorgi.

Who’s investing in SPACs?

Pretty much anyone who can is getting into SPACs.

Sovereign wealth funds have committed $1.79 billion to them in 2020, compared with $68 million in 2019, according to the SWF Institute.

The attraction for investors is that SPACs are run by some of the world’s most successful entrepreneurs and former corporate executives. And if a deal is not sealed within the prescribed period after listing, they get their money back. The latter is exactly the space in which Intertrust Group facilitates SPAC listings. For each SPAC transaction, our Escrow & Settlement team in Amsterdam incorporates a single purpose insolvency remote foundation to ringfence the investor’s funds, while investment opportunities are sourced. The purpose of this structure is so attractive because it offers a “bankrupt remote” solution, whereby an independent third-party – the escrow agent – will hold the funds in accordance with the prospectus and applicable law and regulations. Should the prescribed investment period under the prospectus not be met, then the funds will be returned to the investors – as agreed in the said prospectus.

Investment banks are also in the market, with dealmakers picking up the phone soon after a SPAC lists to pitch business combinations on behalf of their clients. There is even talk that SPACs could outnumber traditional IPOs this year.

One thing is certain. Trillions of dollars in fund commitments are sitting in near-zero interest rate accounts waiting to be used, making SPAC listings a long-awaited solution.

There is much to play for.

Why Intertrust Group?

  • The only central bank licensed escrow service provider in Europe experienced in facilitating SPACs
  • European Payment Service Directive 2 (“PSD2”) compliant
  • Tailor-made escrow agreements geared to service cross-border transactions, governed by the laws of many key jurisdictions, including the EU and the UK
  • A growing track record of SPAC transactions, including the first ESG-focused SPAC listed in Amsterdam (ESG Core Investments)
  • Ability to offer a range of additional corporate solutions from establishing the foundation, provide its registered address to Company Secretarial Services and Trustee
  • Ability to act as a Listing and Transfer Agent on The International Stock Exchange (“TISE”)