Hambro Perks Announces First London SPAC​

By Jake Rickman​

What do you need to know this week?

Hambro Perks, a venture capital firm, has announced it will launch London’s first special purpose acquisition company (“SPAC”).

Last year, the government revealed plans to reform the rules for public listings to attract SPAC investors. Before the reform, New York and Amsterdam were the only jurisdictions that made it easy to raise capital through SPACs.

Hambro Perks hopes to raise £150m from investors to purchase a European tech company with high-growth potential. It has 15 months to do this. If it cannot, it will return the money to its investors.

Why is this important for your interviews?

SPACs have become increasingly popular over the past two years, especially in the US, where high-profile companies like BuzzFeed have gone public using SPACs.

Given Hambro Perks’ announcement, SPACs have become a salient topic that can make for productive interview fodder once you understand how they work. Let me explain.

SPACs are an alternative way for a company to go public.

Traditionally, to go public, a company would have to launch an Initial Public Offering (IPO), which is an expensive and lengthy process.

SPACs operate differently. An investment fund (like Hambro Perks) will create a company whose only purpose is to acquire a pre-existing company. Because this company has no other operations, it is essentially a 'blank cheque shell company'.

With the help of their legal team, the owners of the shell company will prepare a 'prospectus' that outlines the type of company it intends to acquire, along with some other particulars. This shell company will then be listed on the public market.

The goal is to get investors like pension funds, private equity firms, and high net-worth individuals to buy shares in the shell company and raise enough capital.

It will then go to the private market and look for a company that meets the criteria laid out in the prospectus.

If it finds a company, the SPAC will buy it and merge with it — sometimes on the condition of the shareholders’ approval. The new company then 're-lists' on the stock market, usually under the name of the company it acquired. The idea is that if it is a good company, the shareholders of the shell company will be the owner of a new public company that will attract further public investor interest in the future.

How is this topic relevant to law firms?

While some market analysts question if SPACs will remain popular in the future, there is a good chance they will become increasingly commonplace. Therefore, companies and investors will need to instruct firms with strong Equity Capital Markets (ECM) teams to advise them on the process and to navigate any disputes that may arise.

Global law firms have also been helping to keep the SPAC momentum going. In August, it only took a matter of days to get 49 law firms to band together to defend SPACs from a series of lawsuits brought against them.

Hasbro Perks has instructed Clifford Chance’s ECM team.