New SPAC set to float in London: can you buy its shares?

A new SPAC has announced plans to float on the LSE. Here’s everything you need to know about the SPAC, its listing and whether you can buy its shares.

Bus waiting in front of the London Stock Exchange on a sunny day.

Image source: Getty Images

Special purpose acquisition companies (SPACs) are a relatively new phenomenon in the UK, but they’ve grown in popularity over the last two years. Now, the London Stock Exchange (LSE) is getting ready to welcome its newest SPAC company.

Financials Acquisition Corp, a UK SPAC that focuses on insurance technology, has announced plans for a £150 million listing on the LSE. Here’s everything you need to know about this planned SPAC listing, including whether you can invest in it.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

[top_pitch]

New SPAC to list on the LSE: what do you need to know?

Financials Acquisition Corp plans to float 15 million shares at a price of £10 per share to raise £150 million.

The company will then seek to merge with a technology-enabled company or business that operates in or is related to the insurance or broader financial services industry.

According to the SPAC, “The companies being considered for a business combination by Financials Acquisition Corp must have the potential for sustainable advantage beyond short-term growth, significant bottom-line growth, a strong management team with a solid track record of value creation who are ready for public markets, as well as operating in parts of the insurance value chain where technology offers a structural operating and/or distribution advantage.”

The listing’s sponsor is FINSAC LLP. This is a limited liability partnership founded by experienced insurance and financial services executives William Allen and Andrew Rear.

FINSAC also has the backing of certain institutional strategic investors and industry experts.

How do SPACs work?

SPACs do not operate their own businesses. Instead, they are formed solely for the purpose of acquiring or merging with an existing company.

A SPAC raises funds through an initial public offering (IPO). The SPAC then uses the money to fund a merger or the acquisition of a target private company.

Once the merger or acquisition happens, the new company begins trading on the stock market under its new name. A SPAC, in essence, provides a faster and smoother path for private companies to go public.

The UK could become a more attractive destination for SPACs in the future, following a revision of SPAC listing rules by the FCA. Recent rule changes that could entice more SPACs to list in the UK include:

  • Lowering of the minimum size threshold of money raised from third-party investors when a SPAC’s shares are first listed from £200 million to £100 million.
  • Removal of the suspension of trading in a SPAC’s shares upon the announcement of a potential merger or acquisition.

[middle_pitch]

Can you invest in a SPAC?

Once a SPAC is listed, investors can buy its shares in the same way as shares of any other publicly-traded company.

One easy and fast way to buy shares is through a top-rated share dealing account.

However, if you plan to invest an amount less than £20,000, consider investing via a stocks and shares ISA. The main advantage of a stocks and shares ISA is that your investment returns are typically free from tax. Check out our list of top-rated stocks and shares ISAs in the UK to see if you can find one suitable for your needs.

What do you need to know before investing in a SPAC?

SPACs are still a relatively new phenomenon, despite their growing popularity.

Remember that a SPAC has no business of its own. Consequently, there are no business performance metrics you can analyse to determine whether the entity has any long-term potential.

When you invest in a SPAC, you are essentially betting on the expertise of the SPAC’s sponsor and management to lead it to a merger or acquisition that will result in a profitable return on your investment.

So, before you invest, do your homework and make sure you are comfortable with the risks involved.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »