RAt the right time, here is a 4 billion stock quote from a young and exciting UK electric vehicle company, a mini Tesla, if you like. It’s just the thing ministers have to brag about, you might think: proof that the UK has a few fast growing tech innovators capable of injecting oomph into governments, a 10 point blueprint for a green revolution .
There’s just a downside. Arrival, with its head office in London and operations in Oxfordshire, will not arrive at the London Stock Exchange. It is listed in New York on the Nasdaq, via an injection into one of those Special Purpose Acquisition Companies, or SPACs, which are all the rage on Wall Street this year.
From an arrivals point of view, you can understand why he chose the United States. Teslas’s gravitational pull is strong. The pool of investors wishing to get into electric vehicle businesses is larger.
And, as Arrive intends to locate its decentralized micro-factories around the world, the international profile that comes with an American listing helps. This is in addition to the support Arrival has already received from Korean manufacturers Hyundai and Kia.
The appeal of the SPAC model is also easily explained. This is the structure by which investors invest capital and then look for a target to buy. Critics see it as a blank check investment, but the companies acquired in this case, Arrival are getting speed and, potentially, long-term partners.
Arrival likes the look of the backers put together by Peter Cuneo, former CEO of the Marvel Comics company. Now, a listing and $ 660 million ($ 500 million) of fresh capital will be made in early 2021 without a problem.
One response is to shrug your shoulders and say that it doesn’t matter which stock market house arrivals you choose. The company will retain its headquarters in the UK and maintain its research and development budget, currently 80-100 million per year, here. It can play its part in the green push. What is the problem?
It’s this: A vibrant and bustling stock market for tech companies is a very useful asset if, like in the UK, you need large amounts of private capital to make your green revolution happen. It attracts investors and expertise and makes the process smoother.
The London stock market was already at risk of looking heavy on the green tech front, but the US PSPC factor is new. Purists may decry PSPCs as an abomination of governance (the scrutiny is minimal) but be less relaxed if US investors use the quick and loose approach to shop around the world, including the UK, for them. most interesting technology companies.
PSPCs are indeed possible in the UK, they have been used. But the structure is more awkward. For starters, the transactions are considered reverse takeovers under the Financial Conduct Authority’s listing rules, which slows down the process. Third-party investors also don’t get the same right of refusal on a proposed acquisition, which diminishes their appeal.
There is a potential problem here and the UK financial institution seems to sense it. When Chancellor Rishi Sunak briefly touched on a task force to reform the UK listing regime in his golden-green speech last week, David Schwimmer, managing director of the London Stock Exchange Group, jumped on the line. He wants swift action to strengthen London’s reputation as a competitive and innovative place to inventory and raise capital.
You can’t blame him. Arrival is just a business but, with a valuation of 4.1 billion, it would have been a few steps from the FTSE 100 index if it had a premium listing in London. So much for the prestige of Footsie status. Instead, an American-style SPAC, considered trendy only a year ago, got the gig. It is a concern.
Another successful outing for Stephen Hester
Stephen Hester, chief executive of RSA, can consider it a successful round. Its shareholders will be pleased with a $ 7.2 billion takeover of the former insurer by Intact, of Canada, and Tryg, of Denmark, the premium is 50%.
He will land a payday up to 16m for himself at the end. And, since RSA is infinitely less exciting than the Royal Bank of Scotland after the crash, its last outing, popular prints have had fewer opportunities to use this photo of him on horseback.
What is he going to do next? Lady Luck normally offers you a future that isn’t what you expected, he said.
OK, but he was the Managing Director of three FTSE 100 companies (the other was British Land) and is still only 59. A fourth outing perhaps never done by anyone before should be possible.