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A blank check company has abandoned a bid to raise up to £300 million from London Stock Exchange investors for a new insurance venture, in a setback for the UK market.
Financials Acquisition Corp, a special purpose acquisition company, said on Monday it had terminated a plan to merge with a newly formed company, London Innovation Underwriters, after the latter received “insufficient commitments” to meet a minimum target of $150 million pounds to achieve.
LIU had intended to use the funds to invest in Lloyd’s of London, the world’s oldest insurance market. Under the plan, the money would have flowed through London Bridge, a platform that allows investors to participate directly in market developments by providing capital to the syndicates that underwrite risks from cyberattacks to hurricanes.
Spacs and their sponsors typically raise money by listing on stock exchanges before then pursuing a merger with a private company. In the final throes of the U.S. stock bull market, a Spac frenzy swept Wall Street and catapulted dozens of companies onto public markets.
However, the Spacs had difficulty gaining a foothold in London. While London has tried to attract Spacs, authorities have largely focused their efforts on persuading more companies to list in London. Concerns about the market’s future deepened earlier this year after building materials group CRH decided to switch its listing to the US and British chip designer Arm also chose New York for its IPO.
FAC said on Monday it had canceled a shareholder meeting scheduled for Tuesday and that it was now “unlikely” it could find a new target and complete a business combination before the end of the year, the deadline set in its charter.
Instead of seeking a further extension, the FAC would “cease operations except for the purposes of returning funds to shareholders and carrying out an orderly wind-up of the company,” it said.
In advance of the fundraising campaign, Spac had already reduced the amount it wanted to raise. The company said at the time that this did not reflect investor sentiment, but rather the difficulty of getting a significant amount of money into Lloyd’s syndicates in time for the next underwriting cycle.
The news will also be a setback for Lloyd’s attempts to attract more investors into the insurance market, which has been a center for specialist commercial insurance and reinsurance for centuries.