After U.S. SPAC frenzy, blank-check firms eye deals in Europe's burgeoning tech sector

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  • Europe has largely missed out on the SPAC boom, with just three blank-check firms listing in the continent last year.
  • But an increasing number of SPACs are listing in New York with the aim of snapping up a European tech firm.
  • European start-ups raised a record $41 billion in funding last year, according to venture capital firm Atomico.

 LONDON — The SPAC craze is starting to gain some momentum in Europe.  

After a banner year for so-called special purpose acquisition companies in the U.S., a growing number of blank-check firms are raising funds with the intention of snapping up a European tech company.

SPACs are shell companies that are created with the sole purpose of raising funds to acquire an existing private company, so that the target firm can bypass the traditional initial public offering (IPO) process.

These blank-check companies raised a total of $78.2 billion across 244 IPOs in the U.S. last year, according to data from Refinitiv. The U.S. SPAC mania continued into 2021, with another 134 firms raising nearly $39 billion since the start of the year.

The attraction of SPACs is that they offer a way for companies to fast-track a stock market listing. An IPO can be a much longer process, and some firms are eschewing the traditional route to avoid potential swings in market sentiment. IPOs have also attracted criticism from venture capitalists like Ben Gurley, who worry they are being underpriced.

SPACs provide an alternative to IPOs, as well as direct listings where firms sell existing shares to public market investors. They often attract high-growth tech firms. Last year, U.K. electric vehicle maker Arrival announced a deal to go public via a merger with a U.S. blank-check firm.

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Europe has largely missed out on the SPAC boom. Just three SPACs listed in Europe last year, netting $495 million. And not a single SPAC has debuted in the continent so far this year.

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