Intertrust N: Swiss SPAC opportunities on the horizon for asset managers


The Swiss Financial Authority (FINMA) has given the green light to special purpose acquisition companies (SPAC). Members of our Swiss team outline the listing standards for December 6, when SPACs can officially be listed on the SIX Swiss Stock Exchange.

Don’t miss our next report on SPAC opportunities in Switzerland presented by the Intertrust Group team

While PSPCs will not be allowed to list and trade on SIX until December 6, there are already signs of activity. For example, FINMA has authorized a fund manager to participate in SPAC Investments from November 16, 2021.

The fund co-founder said he was convinced that with experienced entrepreneurs and industry experts, PSPCs will bring “hidden champions” to the Swiss stock exchange, which historically has a base of sophisticated investors.

What are the listing standards and investor protections for Swiss PSPCs?

Swiss SPACs are subject to the same requirements as other listed companies. From this perspective, all SPACs in Switzerland must be listed as a joint-stock company (AG / SA) for the sole purpose of merging or acquiring one or more operating companies.

A Swiss SPAC has a maximum limit of three years to complete a targeted merger or acquisition. This is longer than in other after-sales service markets, many of which have lead times of two years with special extensions of up to three years.

If this time limit is not respected, the SAVS will be automatically canceled and liquidated, and the funds in the escrow account will be returned to investors.

Freely negotiable securities must represent at least 20% of the shares in circulation and have a market capitalization of CHF 25 million (≅ USD 26.8 million). While there is no historical requirement or requirement to have financial statements going back three years for the PSPC issuer, this changes after de-PSPC, as we explain below.

SIX has paid particular attention to the protection of investors, especially individuals. For example, SPACs are required to disclose who their founders are, any potential conflicts of interest, and the amount recoverable when an investor disagrees with a merger or delisting.

Likewise, information must be provided on the conditions under which additional capital can be raised depending on the sector of activity of the target company.

  • The prospectus must contain information on the dilutive effect of the additional issues.

  • Investor approval is required for acquisitions or mergers.

  • The combined post-de-PSPC entity must issue quarterly financial statements up to two years if the acquiree does not have audited financial statements dating back three years.

Timelines, investor protections, certain disclosure conditions and standards have also been put in place. These include:

  • The economic interests of the founding shareholders in the target company must be known.

  • The proceeds of the issue raised in an IPO must be deposited into an escrow account at a bank.

  • The SAVS must grant all shareholders a fundamental right to return the shares acquired during the IPO.

  • Instead of stocks, investors may be offered convertible bonds as part of the IPO.

  • The board of directors, management, founders and sponsors of SPACs must adhere to a lock-up agreement prohibiting directors and officers from selling shares for six months. They also have reporting requirements and must disclose management transactions. This applies up to one month after the six-month blocking period.

In view of the above requirements, which are clearly aimed at investor protection, Swiss and international sponsors will benefit from the lessons learned from already active PSPC markets.

Why Intertrust Group?

As PSPC standards and capital markets evolve across the world, you may need a tailored approach from a service provider with a true understanding of changing markets. Our international team of experts in Switzerland and active PSPC markets can provide the following services:

Michael J. Birnbaum