After a SPAC roadshow with firms across Switzerland, we see an untapped pipeline of target opportunities within a very hospitable deal environment, say Boudewijn Korten, Commercial Director, Emma Holthuizen, Business Development Manager and Boudewijn Thus, Business Development Director
Switzerland’s legal community is eager to get special purpose acquisition companies (SPACs) deals off the ground. That is because many members spent months liaising with Swiss Financial Authority (FINMA) regulators to ensure competitive investor protections were in place.
After some stops and starts, Swiss regulators approved SPACs in December 2021, with VT5 Capital claiming the first SPAC listing in Switzerland that month. The IPO was oversubscribed, raising about CHF200m.
Just as VT5’s SPAC listed, however, the omicron virus took hold, raising question marks over border movements, supply chains, inflation, higher interest rates and talk of higher corporate taxes.
However, nearly two months later, with omicron better understood, the appetite for SPAC listings in Switzerland is still healthy – perhaps even more so now legal professionals, investment firms and sponsors have been able to digest the rules.
Some legal professionals see 2022 as the “year of the de-SPAC”. Sponsors around the world are running out of time to select a business combination and Switzerland possesses one thing other markets lack – an ample supply of business combination targets.
There are about 15,000 multinationals in Switzerland, with one in every four people employed by one. In the pharmaceutical sector, for every job created, an extra 3.2 full-time equivalent jobs are generated in other companies and sectors. If SPAC sponsors take advantage of this significant “multinational multiplier effect” on entrepreneurship, they are likely to be spoiled for choice when seeking their perfect match from:
Switzerland’s start-up community has grown considerably over the past decade thanks to hundreds of multinationals and university spin-outs. Big pharma may take the lion’s share of spin-offs and spin-outs in terms of size and number, but Switzerland’s fintech sector is also fertile ground for sponsors seeking targets with global appeal.
A SPAC listing in Switzerland is the least complicated and fastest route to capital for a target company. The fast-growing fintech segment demands swift growth and regulatory approvals to operate in multiple markets, both of which require capital.
It’s only a matter of time before sponsors catch their second wind after last year’s regulatory hold-ups. The building blocks for successful SPACs business combinations in Switzerland are all there, so we believe sponsors are doing their research while awaiting good news from the maturity of other SPAC markets, such as Luxembourg and Amsterdam. At this point, there’s nothing to hold sponsors back, nor any companies being targeted, if an attractive proposition emerges – and there are plenty.