Following a frenzy of deals in the early days of the COVID-19 pandemic, SPACs have lost popularity as they struggle to find businesses to merge with. Others have seen lackluster stock performance after acquiring a target
Financials Acquisition Corp. said Monday it would enter liquidation as it scraps a planned merger with its newly formed insurance venture, citing “insufficient” cash commitments due to volatile capital markets.
The special purpose acquisition company had unveiled plans to combine with London Innovation Underwriters and raise additional funds to deploy in the Lloyds market.
A shareholder meeting planned for Nov. 14 to approve the tie-up plans and seek up to £300 million has been canceled, the company said.
The SPAC has an end-of-the-year deadline to use funds raised for a takeover and said it would not seek an extension.
“Consequently, the Company proposes to cease operations, other than for the purpose of returning funds to Shareholders and conducting an orderly winding up of the Company,” Financials Acquisition Corp. said in a statement.
“In order to ensure due payment of creditors, the Company proposes to appoint a liquidator as soon as practicable to administer the winding up of operations and expects to release a further announcement regarding this process in due course.”
LIU said that despite interest from a wide range of investors, the level of demand was insufficient to reach the minimum cash threshold required. It said LIU said it would consider exploring alternative options to pursue its strategy of accessing the Lloyd’s market.
The failed effort comes amid a dearth of new listings in London and concerns over its appeal as a capital markets hub despite profits at Lloyd’s that are booming due to rising prices for insuring commercial risks.
Following a frenzy of deals in the early days of the COVID-19 pandemic, SPACs have lost popularity as they struggle to find businesses to merge with. Others have seen lackluster stock performance after acquiring a target.