Data on the Data
Episode 4: Will SPACs surge in Europe?
In this week’s episode of Data on the Data, David Craig, Group Head, Data & Analytics and CEO, Refinitiv at LSEG and Oliver Hetherington of Refinitiv, look at the US surge in the listings of SPACs compared to the very low levels of activity in Europe. Data usage, however, shows that the European investor appetite for these vehicles is as strong as it is in the US. Is the time now right for Europe to join the SPAC Age?
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[00:00:06] Hi, I'm Oliver, Director of Customer Analytics at Refinitiv, and welcome to 'Data on the Data'. SPACs or Special Purpose Acquisition Companies, are the buzzword in the financial markets at the moment. Having raised around 10 billion US dollars prior to 2020, we've seen explosive growth since then, continuing into 2021. Also known as 'blank check' companies, they offer an investor greater speed, flexibility and price certainty when compared to IPOs, especially in this pandemic time. On the face of it, it looks like a US craze driven by Silicon Valley investors riding the wave of their tech investments over the last couple of years. Whilst amounts raised are heavily skewed toward the US, Refinitiv's David Craig explains that interest in SPAC's is far more geographically diverse than that number implies.
[00:00:57] Thanks, Ollie. SPACS raised over 70 billion dollars in the US last year, nearly seven times more than the previous year, and we're already approaching that figure just barely three months into 2021. These numbers, of course, dwarf what's been raised in Europe, barely two billion dollars last year. So it does feel like SPACs are an exclusively US phenomena. But then look at the SPAC data usage across our platforms. We're finding that European investors are just as hungry for data on specs as their US counterparts. In fact, among asset managers, activity in Europe has been higher than anywhere. By contrast, in the US, and this is where we're seeing some fascinating differences, there in the US, the strongest interest is from the brokers and dealers. So this could suggest that the US is benefiting from both the listing opportunity as well as the investment demand. What's the take-home for me? That the European market's appetite for SPACs is just as strong. So should they emerge in Europe, the demand seems to be there. It's clear from the capital figures raised that the US is the dominant force within the SPAC landscape, and where retail investors in the US have been given that chance to participate in more venture capital style investments. This could mean more volatility, but it's an opportunity that European investors are embracing. And that appetite could eventually increase the size and scale of European listings and start to close the gap with the US. And I think a really good question is if that SPAC boom does take off in Europe, could it fund the innovation and investment that Europe so badly needs or will it just not materialize? Whatever happens, I think the data shows us that the investor demand from Europe is certainly there.
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