The Channel Islands Securities Exchange (CISE) is seeking to diversify and introduce new products for listing on the Exchange whilst introducing rule changes to strengthen its core business.
New rules have been introduced which allow Special Purpose Acquisition Companies (SPACs) to be listed on the CISE.
A SPAC is a cash shell used to raise money for a very specific investment objective. The SPAC is usually initially formed by a management team with experience in private equity investments, who will comprise the executive directors and management team. A SPAC tends to be quicker and cheaper to establish than a fund and, whilst the SPAC does not have the same spread of risk, investors are willing to risk higher returns by backing management teams with a proven track record in specific asset classes.
It seems that the SPAC is growing in popularity as international markets recover from the global financial crisis, and so the CISE has reacted to this development by launching specific rules (through a new Chapter 10) to introduce SPACs as a new product for Listing.
These new rules were effective from 23 November 2015 and the CISE hopes that the low minimum market capitalisation, a 36 month timeframe for an acquisition to be made and the Exchange’s competitive and transparent fee regime will lead to a new stream of business.