Lakestar SPAC 1 SE: IPO on the Frankfurt Stock Exchange
Luxembourg — The public shares of Lakestar SPAC 1 SE, the first so-called Special Purpose Acquisition Company (SPAC) focused on an acquisition in the technology sector in Europe, have been admitted to the regulated market of the Frankfurt Stock Exchange (General Standard) on Monday. In addition, SPAC’s public warrants were introduced to the over-the-counter market at Börse Frankfurt Zertifikate AG. — The sponsors of Lakestar SPAC 1 SE were advised on the IPO by a team from the international law firm Arendt & Medernach specializing in capital market transactions, led by partners Alexander Olliges and François Warken.
Within two days, Luxembourg-based Lakestar SPAC I SE raised EUR 275 million from institutional investors. It is the first shell company of its kind in Germany in more than ten years. SPAC has two years to identify and buy one or more promising tech companies. The focus is on publicly traded companies worth between EUR 750 million and EUR 4 billion.
The prospectus was approved in Luxembourg on February 19, 2021 by the Commission de Surveillance du Secteur Financier (CSSF) in its capacity as competent authority. In addition, Lakestar SPAC 1 SE has issued sponsor shares and sponsor warrants. This transaction is expected to pave the way for the comeback of other Luxembourg-based SPACs on European stock exchanges.
The SPAC as an alternative investment opportunity and alternative to going public
A SPAC is an acquisition vehicle typically formed by professionals in a particular field (such as in the case of Lakestar SPAC 1 SE technology). The primary objective is to acquire, through a business combination, an operating company or group that is often itself in the early stages of an IPO. Such an acquisition will be financed by SPAC’s capital raising in the course of its own IPO. Proceeds raised in this manner are held in an escrow account for quick deployment when needed. Once a potential acquisition target has been identified, the business combination must be approved by a majority of the votes cast at a shareholders’ meeting of the SPAC and, as a rule, completed within a period of two years from its listing. Otherwise, the SPAC will be liquidated.
SPAC’s public shareholders thus have the opportunity to invest directly in an acquisition vehicle while enjoying the legal guarantees of a listed company: regulation and transparency, as well as the right to have a say in the business combination. If this is approved, the public shareholders who do not approve of the planned business combination can demand the repurchase of their shares. For the target company, the business combination represents an attractive alternative to a traditional IPO of its own.
New potential for Luxembourg
The launch of Luxembourg’s first SPAC in more than a decade points to attractive opportunities for Europe and Luxembourg alike. Thanks to its business-friendly environment, investment focus and specialized regulatory authorities, Luxembourg is ideally positioned as a location for launching SPACs. Expert assistance in areas specific to SPAC formation (including capital markets regulation, corporate law, M&A, and tax) is essential to the successful formation of a SPAC.
“SPAC offers a new way of going public that meets today’s desire for efficiency and shortened time-to-market,” explains François Warken, partner and head of Arendt & Medernach’s capital markets law practice in Luxembourg. “Lakestar SPAC 1 SE is also a very apt example of the versatility of Luxembourg company law and relevant corporate governance rules, which allow the key features of a U.S. SPAC to be accurately replicated in a Luxembourg company while fully complying with EU securities and stock exchange regulations.”
“This type of acquisition is a great opportunity for Luxembourg: right in the heart of Europe and also with good access to all major European stock exchanges,” emphasizes Alexander Olliges, Partner in Arendt & Medernach’s Corporate/M&A practice in Luxembourg. “The accessibility of the regulator and its knowledge of the product and conditions, the flexibility of Luxembourg company law in implementing market conditions for a SPAC and the unique international environment allow projects to be realized quickly — especially in the field of technology and innovation, as we have seen in the case of Lakestar SPAC 1 SE.”
The team of Arendt & Medernach was composed of Alexander Olliges (Partner, Lead Corporate), François Warken (Partner, Lead Capital Markets) and Jan Neugebauer (Partner, Tax) as well as Senior Associates Noémi Gémesi (Capital Markets) and Maria Grosbusch (Corporate) on the side of Lakestar SPAC 1 SE.
The IPO in Frankfurt was handled by the law firm Sullivan & Cromwell under the leadership of partner Dr. Carsten Berrar.
About Arendt & Medernach
Arendt & Medernach is the leading and independent law firm in Luxembourg. The firm’s international team of more than 350 lawyers and attorneys specializes in providing legal advice and legal representation to Luxembourg and foreign clients in the area of financial and commercial law. Arendt & Medernach has offices in Luxembourg, Dubai, Hong Kong, London, Moscow, Paris and New York. In December 2020, the firm was named European Law Firm of the Year and Law Firm of the Year for Benelux by The Lawyer magazine.