When online used car dealer Cazoo, the fastest UK firm to achieve unicorn status, announced it would be going public on the New York Stock Exchange via a $7 billion merger with a special purpose acquisition company (SPAC), the news was considered a blow to the City of London.
Cazoo isn’t the first UK company to snub London in favour of New York. Electric vehicle firm Arrival announced it was going public via a SPAC last year and made its Nasdaq debut on March 25. Meanwhile, diagnostic test manufacturer LumiraDx is also set to float on the Nasdaq in a $5-billion SPAC deal.
The acronym SPAC has become synonymous with a frothy market. Essentially, SPACs are a type of investment vehicle, blank-cheque companies that list on stock exchanges and then hunt for privately owned businesses to take public. For the targets being acquired, it’s an easier process than going down the usual flotation route.