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ACG Acquisition (ACG) is set to achieve a significant milestone by the first special purpose acquisition company (SPAC) listed on the LSE to undergo a de-SPAC transaction under the liberalised SPAC regime introduced in August 2021. A de-SPAC happens when an existing publicly listed SPAC makes an acquisition, typically of a private company, thereby completing its investment. Being acquired by a SPAC allows companies to bypass some of the requirements and timeline for initial public offerings (IPO). To qualify for listing under the new regime, a SPAC must adhere to specific rules, such as raising a minimum of £100m from its IPO.

ACG aims to raise approximately $301m in gross proceeds to part fund its $1bn acquisition of two mining operations in Brazil producing nickel sulphide and copper concentrates.  This deal, backed by Glencore and carmakers Stellantis and PowerG, will position ACG as the sole London-listed producer of nickel sulphide on a large scale. The increased investment in car battery manufacturing, exemplified by Zinnwald Lithium plc's recent placing to fund their expansion, can be attributed to the rise of electric vehicles and the global push for sustainability and carbon neutrality (see: To EV and beyond: British automotive industry looks to the future). In its , ACG stated that it recognises the importance of reducing carbon footprint and upholding best-in-class environmental, social, and governance (ESG) practices in establishing a responsibly sourced battery metals supply chain.

The FCA introduced new listing rules on SPACs in August 2021, which aimed to bolster London’s attractiveness as a listing destination. ACG is one of the first companies to list under the new rules. Market Tracker data suggests that in 2022, a total of 45 companies were admitted to trading, and 44% of them were SPACs. However, it is important to note that the majority of these SPACs were small cash shells that listed under the old rules. This marks a substantial rise compared to the numbers in 2021 and 2020, where 124 and 49 companies were admitted to trading, with SPACs constituting 11% and 18% respectively. As of H1 2023, SPACs accounted for 23% of all IPOs so far.

Commenting on SPAC activity in 2022, Alasdair Steele, Partner at CMS, stated:

‘2022 saw a run of SPAC IPOs, though a number of these were smaller, cash-shells, taking advantage of the transitional provisions allowing companies to list with a market capitalisation of more than £700,000 rather than the increased minimum market cap of £30 million which is now required’.

Steele also made predictions for SPAC activity going forward:

‘2023 will see the 2021 vintage of SPACs approaching the ends of their time to complete an acquisition or return their cash to shareholders. The 2022 SPACs generally will have another year to complete their acquisitions. With SPAC redemptions at higher levels than historically and a growing number of SPACs in both the US and Europe returning funds to shareholders in the absence of completing an acquisition, the popularity of SPACs will be tested over the coming months and years’.

ACG is the first mining SPAC to list in London under the new rules. The mining sector has experienced a flurry of activity in recent years, with mining IPOs accounting for 45% of all IPOs in 2022. In comparison, in 2021, mining IPOs represented 9% of all IPOs. According to Nick O'Donnell, Partner at Bird & Bird, one reason for this increased activity is the growing demand for specialist metals, particularly in the electric vehicle (EV) sector.

For more on SPACs, please refer to our Lexis+® UK Corporate .