8/8/22, 10:39 PM SPACs Bolster the U.S.

’s Global Lead in IPOs - WSJ

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MARKETSSTOCKSIPOS

SPACs Bolster the U.S.’s Global Lead in IPOs

Europe is losing market share as firms bypass local exchanges to list in New York
through blank-check company deals

By Ben Dummett Follow

May 21, 2021 5:30 am ET

The boom in blank-check companies earlier this year has lured companies to list in New
York and has cut into Europe’s share of the global market for initial public offerings.

Signa Sports United, a Berlin-based sports e-commerce and technology platform, is among
the latest looking at this route through a special-purpose acquisition company, or SPAC. It
is in talks to merge with Yucaipa Acquisition to go public on the New York Stock Exchange.
The deal would include the acquisition of the U.K. online bike retailer Wiggle Chain
Reaction Cycles and could value the combined company at up to $4 billion, according to
people familiar with the matter.

Eleven European companies operating in sectors ranging from packaging to healthcare

have announced deals this year to go public through a U.S.-listed SPAC, according to
Refinitiv. European exchanges have only attracted four such tie-ups: two in Germany, one
in the U.K. and one in Italy.

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Europe's Slide
Annual share of global IPO market for the U.S., Europe and Asia, excluding Japan, since 2015

U.S. Europe Asia ex Japan

70%

60

50

40

30

20

10

0
2015 '20

Note: Annual market share figures are for the full years between 2015 and 2020 and through May 19 for 2021
Source: Dealogic

That divide highlights Europe’s competitive disadvantage when it comes to SPACs. The
region has a smaller pool of these vehicles looking for targets to take public on a European
exchange.

SPACs are publicly listed shell companies that raise money to make an acquisition. They
offer targets a quicker way to go public than a traditional IPO. Their popularity in the U.S.
has outpaced Europe because of more accommodating listing rules in some markets and
investors’ greater familiarity with the vehicles.

Besides having far more SPACs, the U.S. has more-developed technology and healthcare
sectors. These have emerged as leading sources of new listings, said Paul Go, IPO head at
Ernst & Young.

In 2015, IPOs on Europe’s exchanges raised $66 billion to lead the three biggest markets
with a 34% share, ahead of the U.S. at 19% and Asia, excluding Japan, at 32%, according to
Dealogic. The continent’s share has since dropped to about 15% so far this year, while the
U.S. leads with about 61%. Asia, excluding Japan, accounts for around 19%.

The postponement of at least three U.S. offerings last week could signal the start of a
slowdown in the U.S. IPO market, and the frenzy around SPACs has cooled recently. Even

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8/8/22, 10:39 PM SPACs Bolster the U.S.’s Global Lead in IPOs - WSJ

so, Europe is far behind this year.

So far in 2021, U.S. exchanges have attracted at least 324 SPAC listings, of which 309 are
still searching for deals. That compares with 10 in Europe, none of which have done a deal
yet, according to Dealogic.

Another issue facing Europe is that U.S.-listed SPACs offer potential takeover targets a
springboard for geographic expansion, SPAC sponsors said.

“We are looking for a European or Israeli company that is either already present in the U.S.
or has a clear rationale for why it would want to expand in the U.S.,” said Tommy Stadlen,
chairman of NYSE-listed Tailwind International Acquisition Corp.

In other cases, a deeper and more knowledgeable pool of analysts and investors following a
particular industry gives U.S. SPACs an advantage attracting European targets. Such a pool
was part of the reasoning behind Luxembourg-based Ardagh Group SA’s pact in February
to merge its metal packaging business with Gores Holdings V a Nasdaq-listed SPAC. The
newly created company aims to list on the New York Stock Exchange.

The “peer set and the analysts who cover [the sector] are U.S.-based, and it’s probably fair
to say the bulk of the shareholders would be in the U.S.,” said John Sheehan,
Ardagh’s investor-relations director.

European stock markets are fighting to keep companies at home. Starting in February,
Nasdaq Inc.’s NDAQ 0.48% ▲ exchanges in Sweden, Denmark and Finland introduced rules
allowing SPAC listings.

Meanwhile, the Euronext Amsterdam exchange used a March promotional video for a new
SPAC listing to tout the goal of its parent company, Euronext NV, to be Europe’s SPAC
center. That ambition received support last week with the listing of Hedosophia European

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Growth. The blank-check company is headed by Ian Osborne, a partner in the U.S. with the
SPAC evangelist Chamath Palihapitiya.

The U.K., Europe’s biggest IPO market, is seeking to loosen its listing rules to help the
London Stock Exchange compete LSEG 0.34% ▲ against its New York rivals for SPACs. The
country’s stock-market watchdog is expected as early as this summer to eliminate a rule
that prevents investors from trading a SPAC’s shares between an acquisition’s
announcement and approval of the deal’s prospectus. That change would allow investors
to no longer risk being tied indefinitely to a transaction they don’t like, allowing them to
bet more freely on SPAC IPOs.

Write to Ben Dummett at ben.dummett@wsj.com

Corrections & Amplifications

Signa Sports United is a Berlin-based sports e-commerce and technology platform. An
earlier version of this article incorrectly spelled the company’s name as Sigma. (Corrected
on May 21)

Appeared in the May 22, 2021, print edition as 'SPACs Bolster U.S.’s Global Lead in IPOs'.

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