U.S. Markets

Swiss SPACS on hold as regulator seeks new rules

ZURICH (Reuters) - Swiss special purpose acquisition vehicles (SPACs) have been put on hold as the country’s market regulator seeks new rules to govern the burgeoning business, officials said on Friday.

The Swiss Financial Market Supervisory Authority (FINMA) said it had asked bourse operator SIX to revise its listing rules for SPACs before introducing the new financing instrument.

It cited concerns about market transparency, investor protection and market integrity.

“At FINMA’s suggestion, the SIX body responsible for the admission of securities, the Issuers Committee, has decided to add the topic of SPAC separately to the current listing rules,” SIX said in a separate statement.

SIX’s regulatory bodies were developing these as quickly as possible as part of the self-regulatory process and would submit them to FINMA for approval, it added.

SPACs are shell companies which raise funds through an initial public offering to acquire a private company, which then becomes public. It serves as an alternative for companies looking to enter public markets and allows more certainty in terms of the valuation it can receive on the deal.

The first Swiss SPAC involving asset manager Veraison Capital had been poised for a Swiss listing in the second quarter, and at least two more deals were in the pipeline, sources close to the process have said.

SPACs have gained in popularity, with investors increasingly looking to growth stocks for higher returns and as the COVID-19 pandemic disrupted the traditional IPO process.

But they are also increasingly under regulators’ scrutiny.

The U.S. securities regulator has opened an inquiry into Wall Street’s blank check acquisition frenzy and is seeking information on how underwriters are managing the risks involved, sources told Reuters this week.

Reporting by Oliver Hirt, Writing by Michael Shields; Editing by Alison Williams