US SPACs look beyond their backyard to Europe

Although most SPAC activity is concentrated in the US, the boom in listings spells opportunities for European firms

Amid the ups and downs in financial markets in 2020, the boom in activity in the special purpose acquisition company (SPAC) space has been one of the highlights. Globally, 256 SPACs listed in 2020, raising a total of US$83.3 billion, compared to 73 listings raising US$15.5 billion in 2019, according to data from Dealogic.

Once listed, these “blank check” firms must turn their attention to acquisitions—there were 109 M&A deals around the world involving SPACs in 2020, compared to only 27 the year before. Furthermore, the total value from SPAC deals rose from US$23.9 billion in 2019 to US$159 billion in 2020.

US SPACs look to Europe

The vast majority of the SPAC activity in 2020—both in listings and in M&A—took place in the US, which has historically been the center of SPAC activity. But as interest has boomed, SPAC managers have looked further afield for good assets, including among European firms.

Although the number of SPAC acquisitions of European firms was still low in 2020, the 12 such deals represent a leap up from just one deal of this type recorded in 2019, and two in 2018.

The largest of the EU-related SPAC deals in 2020 was the merger between Isle of Man-based fintech payments firm Paysafe and Foley Trasimene Acquisition Corp II—the US-listed SPAC backed by Bill Foley, vice chairman of FIS and owner of the Vegas Golden Knights hockey team.

As part the US$5.6 billion deal, announced in December and expected to close in the first half of 2021, Paysafe will become a listed firm on the New York Stock Exchange (NYSE). Paysafe is seen as an attractive investment opportunity due to its geographic reach and growth potential in areas including gaming.

Also notable in 2020 was SPAC dMY Technology Group, Inc. II’s agreement to combine with UK-based Genius Sports Group Limited. The transaction implied a pro forma enterprise value for the combined company of approximately US$1.5 billion.

Continuing the trend, the first European SPAC to list in 2021 was the €250 million IPO by ESG Core Investments, a company focused on the Environmental, Social and Governance (ESG) space. ESG Core Investments' shares are listed on the regulated market of Euronext Amsterdam.

Shift toward clean energy drives SPAC deals

The transition toward clean energy sources—currently a major driver of global M&A dealmaking—was also a driver of SPAC merger activity in 2020, especially in the electric vehicle (EV) space.

US-listed SPAC CIIG Merger Co., for example, was attracted to UK-based electric vehicle manufacturer Arrival’s use of microfactories to manufacture affordable electric vans and buses. Following completion of the US$5.3 billion deal, announced in November, the newly combined company will be listed on the NASDAQ stock exchange.

Arrival’s low CapEx and carbon footprint microfactories have been described as a “game changer” for the industry, bringing down costs and accelerating the mass EV adoption. The industry is seeing growing investor interest as global public policy pushes for the electrification of vehicles. At the same time, capital requirements for investments in innovation is high, and being listed gives firms the ability to tap public markets for funds.

Another notable deal in the space was US-listed TPG Pace Beneficial Finance Corp’s merger with Netherlands-based EV-Box. The deal, announced in December and valued at US$883 million, will see the EV charging solutions provider listed on the NYSE following its expected close in Q1 2021.

TPG Pace was formed with the intention of sourcing high-growth companies with strong ESG principles. Michael MacDougall, President of TPG Chase, says he believes the European charging solutions market is poised for “explosive growth” due to the green initiatives being put forward by governments and major corporations.

Also following the clean-energy trend is the US$1.4 billion business combination between Forum Merger III (a SPAC) and electric vehicle company Electric Last Mile (ELMS), signed in December 2020. Upon closing, the combined company will be named Electric Last Mile Solutions and will continue to be listed on Nasdaq under “ELMS.”


SPACs typically have an 18- to 36-month deadline (two years is typical) to complete a merger following the raising of funds. With US-listed SPACs sitting on a record level of cash to spend, the stage is set for another strong year of European activity in 2021. The UK is expected to see a flurry of interest following the recent Arrival deal, with high-growth tech businesses such as used car site Cazoo and health app Babylon reportedly discussing mergers.

While US-listed SPACs accounted for the bulk of 2020 deals, European activity is on the rise. A total of six SPAC companies went public on European stock exchanges in 2020, raising a combined US$540 million, although most of these IPOs were small—the successful US$363.66 listing on Euronext Paris of French SPAC 2MX Organic, the largest European SPAC IPO in 2020, took in more than the other five European SPAC IPOs combined.

Blank check IPOs are expected to rise in 2021 throughout Europe, with Amsterdam in particular emerging as a hot spot for SPAC listings.

As a sign of what’s to come, in early March a UK listings review proposed a number of reforms to attract SPACs (and tech unicorns) post-Brexit, including relaxing SPAC-related rules, allowing dual class share structures to give founders more control and reducing free float requirements to avoid diluting early backers.

The rise of the SPAC is by no means limited to the US and EU. Among stirrings in other nations, Israel is a hotspot, with electric vehicle technology startup REE Automotive’s merger with SPAC 10X Venture Capital Acquisition among the SPAC transactions already underway in 2021. The agreement gives REE an enterprise value of $3.1 billion. "This deal, following so closely on the heels of our ION/Taboola transaction, clearly demonstrates the appetite of Israeli companies to access the US market via SPAC transactions," said White & Case LLP partner Colin Diamond, who leads the firm's Israel practice.

Competition for assets will be fierce throughout 2021, especially as private equity firms are also sitting on record levels of dry powder that must be deployed. As an increasingly valuable part of the M&A landscape, SPAC transactions will be keenly watched by dealmakers over the course of the year.

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