The first special purpose acquisition company (Spac) to launch in the UK following a change in listing rules has announced it will return funds to investors and wind down.
Hambro Perks Acquisition Company (HPAC) said on Monday in a stock exchange filing that due to ‘continuing market conditions’ it would no longer seek a merger.
The Spac listed on the London Stock Exchange in November 2021 with plans to target a European technology business worth at least £800 mn ($992 mn).
In January this year, HPAC said discussions between it and drug developer Istesso had been terminated. The following month it passed a resolution extending the deadline for finding a deal to November 30, 2023.
‘Public equity markets have faced challenging circumstances in the past year, and several new listings have suffered,’ said Sir Anthony Salz, chairman of HPAC, in the new filing.
‘We have had discussions with some excellent companies but, given the current market conditions, we have concluded that there is little likelihood of achieving a successful business combination within our permitted timeframe.
‘Accordingly, it would be inappropriate to incur further expense in attempting to conclude a business combination. The board has therefore made the difficult decision to wind up the company.’
Boom and bust
Spacs, sometimes referred to as blank-check companies, raise funds through an IPO and then search for a private company to merge with.
The process takes the target business public, offering an alternative to the traditional IPO for companies looking to list and raise funds.
Spac listings boomed during the pandemic, with more than 600 IPOs on US exchanges recorded in 2021, according to data from S&P Global.
But the market cooled dramatically the following year amid tighter monetary conditions and growing regulatory scrutiny.
In the summer of 2021, the UK eased the rules around Spac listings in a bid to attract more of this activity to London.
The new rules removed the likelihood that Spacs would have their trading suspended when news of a deal becomes public, as long as certain investor protections are met.