EU regulator wants to investigate Spacs business

The wave has spilled into Europe from the United States. Critics see the Spacs as a further indication of the exuberance on the capital markets.

The trading floor on New York's Wall Street: During the pandemic, the business with empty wallets, the so-called spacs, exploded there.

AThe EU stock exchange and securities regulator Esma now wants to take a closer look at the wave of stock market shells, so-called Special Purpose Acquisition Companies (Spacs). This was announced by Esma’s Executive Director-designate, Natasha Cazenave, in her hearing in front of the European Parliament on Thursday. According to the Frenchwoman, the stock market jackets, which do not yet contain any companies but which will later be used to bring suitable candidates to the stock exchanges, raise the question of whether they are in accordance with EU regulations.

Critics see Spacs as a further indication of the high spirits on the financial markets. In Europe, the former Commerzbank CEO Martin Blessing brought a Spac on the Amsterdam Stock Exchange. The former Unicredit boss Jean-Pierre Mustier has also entered the wallet business together with the richest French, LVMH President Bernard Arnault. So far there have been ten Spac IPOs in Europe with a total volume of $ 1.3 billion. In the United States last year, there were 522 wallets for more than $ 300 billion.

“We have to understand”

“We need to understand why spacs are so popular, why people only give money based on sponsor names and when a project is announced,” said Cazenave. However, it is still too early to make a decision on appropriate regulation. Cazenave is to be the successor to the German Verena Ross, who in turn is in the running for the top of Esma after the Dutchman Steven Maijoor regularly ended his term of office at the beginning of the month and switched to the Dutch central bank.

America’s Securities and Exchange Commission is already dealing with the Spacs issue. She wants to know how investors deal with the associated risks. The British financial regulator FCA is also reviewing its rules because the financial center London wants to become a leading location for these stock market jackets.