Blazing a trail in the European SPAC marketx
How the Firm’s Paris office has become a force in the SPAC market.
The Firm’s Capital Markets team in France has been leading the market with its work on several special purpose acquisition company (SPAC) listings on the Paris stock exchange.
SPACs have proven a popular alternative to IPO listings in the US for several years where they currently account for around a third of all listings, but they have only recently become more common in Europe.
Partner Thomas Le Vert explains: “We advised on the first ever SPAC listing on the French stock exchange back in 2016.
“On that project, we advised the bank syndicate comprising Deutsche Bank, JP Morgan and Société Générale on the initial public offering of Mediawan, a SPAC looking to acquire media assets in Europe, sponsored by Xavier Niel, the French telecom tycoon.”
Since then, the Firm has worked on all six SPACs to be listed on Euronext Paris, advising both on the issuer and underwriters’ side.
Thomas says: “Working on the first ever SPAC listing on the French market involved close consultation with the regulator and stock exchange and adaptions to French law, which gave us unrivalled experience and put us in a great position to win future work.
“The clients who have hired us since clearly value that experience because the SPAC market in Europe is in its early days, so having knowledge of how things work is highly advantageous.”
In recent months, Paris and Amsterdam have largely become the stock exchanges of choice for European SPAC deals, especially because the UK’s current regulations (due to be revised shortly) make it less attractive for this type of listing.
Thomas says: “2020 was a year of rapid growth for SPACs in Europe and we’ve been involved in five major SPACs listings since last December covering a broad range of acquisitions and a variety of clients.
“These have included advising Deutsche Bank and Société Générale on their involvement in 2MX Organic, a SPAC formed to acquire assets in the sustainable consumer goods industry.”
The Firm advised a bank syndicate led by Goldman Sachs on the listing of Transition, a SPAC targeting acquisitions in the renewable energy transition market and, earlier this summer, the Paris team worked with DEE Tech, the first tech-related SPAC listing on the French stock exchange.
Thomas says: “We also advised a banking syndicate led by Goldman Sachs and BNP Paribas on the listing of Accor Acquisition Company, a SPAC sponsored by major French-listed hotel group, Accor.
“The purpose of the SPAC is to acquire businesses that would complement Accor’s work in the hospitality sector. The Accor project represented another market first, because it was the first ever listing of a corporate SPAC in Europe.”
“We have to negotiate and be very careful to follow the latest regulatory requirements and market trends.”
Perhaps the most significant SPAC deal the Paris team has worked on in 2021 was our involvement in the listing of Europe’s first SPAC dedicated to entertainment and leisure, I2PO.
We advised a bank syndicate comprising Deutsche Bank, JP Morgan and Société Générale on the listing in July, which raised around €300 million.
Thomas explains: “The I2PO was a good example of a successful SPAC because the sponsors included complementary representatives from three key areas: a strong figure of the industry (Iris Knobloch, head of WarnerMedia Europe); a well-known banker (Matthieu Pigasse, former CEO of Lazard and now head of Centerview in Paris); and a highly recognized investor (Artemis, the holding company of the Pinault family, owner of Kering).”
The timescales for the listing were far tighter than usual, requiring the Paris team to complete the project in around two months instead of the usual four or five.
Thomas explains: “It was a challenging deadline, but it helped that we’d worked with Matthieu Pigasse on several previous SPACs, so he knew what was involved and we didn’t have to start from scratch.”
The project did raise other challenges, but the team took them in their stride.
Thomas says: “As the SPAC market is still developing in Europe, a lot of our work on SPAC projects goes into getting the structure right, because the French regulator looks at SPACs on a case-by-case basis and regulations and practices evolve regularly, both in France and across Europe.
“So, we have to negotiate and be very careful to follow the latest regulatory requirements and market trends.”
Another challenge with SPACs is that they involve many more negotiations with investors than standard IPOs.
Thomas says: “With IPOs, investors usually want to negotiate price, but with SPACs, it’s more about deciding on a structure they are comfortable with.
“For instance, the 24 months a SPAC could take to seal an acquisition could previously be extended by six months but, following investor demand, the deadline has been fixed at a strict 24 months.
“With market experience so important, the more you work on SPACs, the more you win, so we are in a great position in a fast-growing market.”
“There have also been changes to the structure of the ‘promote’, which previously saw the founders of a SPAC rewarded with an upfront 20 percent share in the capital of the SPAC. On more recent deals, such as the I2PO listing, investors have demanded to switch to a staggered promote mechanism, which sees the founders’ 20 percent share earned in instalments dependent on the performance of the share price of the SPAC.”
People involved on SPAC deals in France include Paris Partner Max Turner, whose experience as a US Capital Markets lawyer and knowledge of the French market has been key to implement US securities law constraints into the French SPAC model.
Others involved include Capital Markets partners Philippe Herbelin and Séverin Robillard, Counsel Jean Paszkudzki, regulatory partner Emilie Rogey, tax partners Alexandre Ippolito and Estelle Philippi, and associates Tatiana Uskova, Boris Kreiss, Isabelle Toure-Farah, Claire Sardet, Sarah Kouchad and Tiphanie Levassort.
As well as their work on the French market, the team also advises on SPAC deals in other jurisdictions, including advising on the listing of ESG Core Investment (a €250 million SPAC focused on making acquisitions in the environmental, social and governance field) on Euronext Amsterdam early in 2021.
Looking forward, the Paris team continues to work on several ongoing SPAC projects and there is further scope for growth in the future, including with respect to M&A and Capital Markets related to the completion of an acquisition by the SPAC, known as DE-SPACings.
Thomas says: “With market experience so important, the more you work on SPACs, the more you win, so we are in a great position in a fast-growing market.
“This mix of experience, coupled with our close relationships with the regulator and the Firm’s global reputation for doing first-tier SPAC work in the US and in Europe, gives us a strong competitive advantage.
“The French regulator, stock exchange and government are very keen for Paris to be a key listing place for European SPACs, especially for tech firms, so the future looks bright.”
