Amsterdam Poised for Leading Role in SPAC Listings

Three SPACs have recently been listed on the Euronext Amsterdam, and more appear to be on the way. The most recent public deal is a €250m listing by ESG Core Investments B.V. in February 2021 sponsored by Infestos Nederland B.V., an investment firm focused on entrepreneurial sustainable investments. The media has also reported that each of LVMH founder Bernard Arnault and alternative asset manager Tikehau Capital are looking at launching Amsterdam-listed SPACs.

We have assembled a table which outlines the basic features of SPACs that have listed in Amsterdam, with a comparison to the typical SPAC structure in the United States. The basic structures are very similar and will be familiar to anyone versed in the current SPAC phenomenon – the public buys units consisting of shares and a fraction of a warrant, the sponsor obtains a near-free promote and contributes some at-risk capital, the IPO proceeds go into trust, the SPAC has up to 24 months to find an acquisition target in a specified sector, SPAC shareholders must approve the business combination, and SPAC shareholders have the right to redeem their shares at the time of the business combination.

However, there are also some differences between the typical US SPAC and the structure utilized in the three recent Amsterdam-listed SPACs. In addition, as discussed below, Dutch law allows even greater flexibility than the terms adopted in the three recent Amsterdam listings. Dutch law does not have rules that apply specifically to SPACs only, and Dutch law allows even greater flexibility to entities formed as a BV. Some of the biggest differentiating factors of Amsterdam-listed SPACs are the following:

Shareholder Approval

• United States: In the United States, SPAC business combinations generally require the approval of a majority of the votes cast, and the sponsor may vote its shares. 
• Amsterdam: In contrast, in the three recent SPAC listings in Amsterdam, the business combination has required the approval of 70% of the votes cast, and the sponsor could not vote its founder shares.
• Further Dutch Flexibility: Dutch law could allow more flexibility than the three listed SPACs - for NVs the approval of the business combination only requires the approval of more than 50% of the votes cast, for BVs there is no explicit rule specifying a percentage vote requirement, and Dutch law does not restrict SPAC sponsors from voting their founder shares in connection with the business combination.

Shareholder Redemptions

• United States: In the United States, up to 100% of the SPAC’s shares can be redeemed by shareholders in connection with the business combination (so long as the SPAC at all times has minimum net tangible assets of at least $5 million). 
• Amsterdam: In contrast, in the three recent SPAC listings in Amsterdam, because the business combination typically requires the approval of 70% of the votes cast, effectively no more than 30% of the shares issued by the SPAC can be redeemed, as only dissenting shareholders are eligible for redemption.
• Further Dutch Flexibility: Under Netherlands law, a listed NV cannot redeem more than 50% of its shares. However, if a SPAC is listed as a BV, the 50% cap on redemptions does not apply under Dutch law and the company can redeem an amount of shares up to the amount of its statutory reserves.

Voting/Redeeming

• United States: In the United States, shareholders can redeem whether or not they vote for or against the business combination (and whether or not they vote at all). 
• Amsterdam: In contrast, in the three recent SPAC listings in Amsterdam, a shareholder of a SPAC was permitted to redeem its shares only if the shareholder voted against the business combination. 
• Further Dutch Flexibility: Dutch law could allow more flexibility than the three listed SPACs - there are no rules prohibiting a SPAC structure in which shareholders are also allocated a redemption right if they vote “for” a business combination.

Sponsor Promote

• United States: In the United States, the sponsor promote is typically equal to 20% of the SPAC’s shares outstanding, although some sponsors have taken a lower percentage. 
• Amsterdam: In the three recent SPAC listings in Amsterdam, the promote has varied between approximately 10% to 20% of the SPAC’s shares outstanding. In one deal, where the SPAC sponsor made an additional cornerstone investment, the sponsor held shares equal to a maximum of approximately 35% of the SPAC’s shares outstanding at closing.
• Further Dutch Flexibility: Pursuant to Dutch/EU law, any shareholder who directly or indirectly obtains control over a Dutch listed NV is required to make a public offer for all of the issued and outstanding shares (unless waived by a shareholders’ resolution with 90% approval of the votes cast by shareholders other than the acquiror).  Therefore, unless a waiver is obtained, a sponsor must avoid acquiring more than 30% of the SPAC’s outstanding shares. If the SPAC is listed as a BV, however, this 30% cap does not apply.

Warrants

• United States: In the United States, all of the warrants are issued to shareholders when the IPO closes. 
• Amsterdam: In contrast, in the three recent SPAC listings in Amsterdam, half of the warrants were issued to shareholders when the IPO closed, and the other half were issued when the de-SPAC business combination closed (to whomever then owned the shares sold in the IPO).
• Dutch Flexibility: Dutch law could allow more flexibility than the three listed SPACs have provided.  Under Dutch law, it is possible to mirror the customary US practice.

Underwriting Fee

• United States: The typical underwriting fee for a SPAC in the US is 5.5% of the IPO proceeds, with 2% paid in cash at the closing of the IPO and 3.5% paid when the business combination closes. 
• Amsterdam: In Amsterdam, the typical fee is 3.25%, with 1.5% payable in cash at the closing of the IPO and 1.75% payable when the business combination closes.

Target Size 

• United States: In the United States, the target must have an aggregate fair market value equal to at least 80% of the value of the assets held in the trust account at the time of signing a definitive agreement. 
• Amsterdam: In Amsterdam, no such 80% rule exists. Dutch SPACs are therefore free in their choice of target and can even choose to acquire multiple targets.  For the purpose of providing guidance to investors, the recently listed Dutch SPACs have provided a non-exhaustive list of guidelines, which apply to the SPAC’s expected selection and evaluation of prospective target companies.

Amsterdam has the potential to become a European center for SPAC listings in 2021 for targets who would prefer to be publicly traded in Europe. Euronext Amsterdam is Europe’s largest share trading center and therefore provides significant liquidity to investors. In addition, unlike other European jurisdictions, Netherlands law does not have any rules or regulations that are targeted at SPACs specifically. There are a number of reasons why SPACs may prefer to be listed in Europe, including tax structuring considerations, the attractiveness of certain sponsors to European investors, avoiding Sarbanes-Oxley and corporate governance requirements imposed by the US stock exchanges, and the attractiveness of the areas of focus of certain SPACs to European investors. We expect that deal terms will continue to evolve as more deals come to the market and business combinations are closed. In particular, as discussed above and in the accompanying chart, Dutch law is flexible and sponsors may opt for terms more attractive to both sponsors and investors than those described above as more deals come to market.

Click here to view our full analysis of SPAC terms.