Really interesting points [USER=1572]@Dheepa[/USER] and [USER=5505]@Neville Birdi[/USER]!
I think your second point - surrounding concerns about the accountability of the process - is probably the area of this discussion that I find the most fascinating.
For me (and this may sound like I'm on a different planet - so do bear with me while I explain), I think most of these concerns actually arise because we are making a direct comparison between 'traditional floats' and SPACs. In my opinion, it actually makes sense to consider them as completely different things, mainly because I would tend to argue that the only real similarity they share is that they're both tradable on the open market. None of the key metrics that we'd use to judge a traditional IPO can be applied in exactly the same way, so we actually need to put them on an entirely different plane (parallel, perhaps) to traditional IPOs.
Thinking in these terms instead, it becomes a lot easier to define a regulatory landscape for SPACs compared to shoe-horning them into the standard IPO regulatory landscape. This type of listing will absolutely need further regulation - like any novel development, it will need developed over time and it's simply an example of the pace of change in society and the economy outstripping the pace of legal development. On this note, it is worthwhile to remember that the UK Listing Authority, which publishes the Listing Rules, doesn't have to go through the parliamentary due process that a legislative change would have to, so it is comparatively easier to develop nuanced rules and regulations for SPACs in a much shorter time-frame to changing legislation. For example, the current three-year track record requirement for Premium listing on the LSE renders SPACs ineligible, yet we see talks of $1bn SPACs being listed on the London market. To me, this is simply cutting the nose off the London market to spite its face.
One of the most heavily criticised elements of SPAC listing is, as you mention, Dheepa, that you're investing based on the name and reputation of investors as opposed to a proven track record of a company. I would tend to say, though, that this actually generates a kind of layer of protection in itself: it's much harder to build the sort of reputation required to launch a successful SPAC than it is to diddle some documents to make a company look like it's performing better than it is.
One final point worth considering is that SPACs aren't worlds away from other types of share issuance already widely known about. Cash box placing is a more long-standing means of exploiting a loophole in the Companies Act (s.561 for anyone interested) surrounding share issuance. In the brief, there is a rule in UK company law which states that, if a company wants to issue new shares, its existing shareholders must first be offered to buy these shares on a pro rata basis to prevent their shareholding from being diluted. One of the very few exceptions to this is where the consideration for the new shares is in a non-cash form. This non cash form could be anything: for example, if the shares are to be issued at a value of £40 each cash, they could be issued for £40 each plus a Freddo and be caught by this exemption. In practice, the most common way of exploiting this loophole is by using a special purpose vehicle (SPV) which is wholly owned by the issuing company, and issuing preference shares in that SPV in exchange for cash. In the day-to-day, cash box placings aren't widely used as they carry connotations of exploiting shareholders/ manipulating the law, so generally get bad press. They do, however, work wonders for quickly raising a lot of money and, as such, we saw several at the beginning of the Pandemic (such as Aston Martin Lagonda Holdings Plc issue a £152m cash box placing in June last year to raise funds at shorter notice than traditional issue would have allowed). This article discusses a little more about the parallels. If we consider that argument, it could even be said that SPACs aren't particularly new at all, and are just a new way of doing an existing thing!
There is a huge amount of food for thought in the SPAC issue, though - I think the proposed changes to the rules by the Hill Commission open up a raft of potential work, mainly across transactional and advisory departments, for London firms in the near future.
