London SPAC to test shareholder appetite for Lloyd's of London venture

FILE PHOTO: Lloyd's of London holds event to mark accession of Britain's King Charles

By Carolyn Cohn and Pablo Mayo Cerqueiro

LONDON (Reuters) - Financials Acquisition Corp said Monday it would ask shareholders to back its planned merger with its newly formed insurance venture, in a test of investor appetite for new stocks.

The special purpose acquisition company (SPAC) unveiled plans earlier this year to combine with London Innovation Underwriters and raise additional funds to deploy in the Lloyd's of London insurance market.

It plans to hold a shareholder meeting on Nov. 14 to approve the tie-up and will seek up to 300 million pounds ($364.7 million) of capital to invest.

The efforts come amid a dearth of new listings in London and concerns over the British capital's appeal as a capital markets hub. Meanwhile profits at Lloyds of London are booming thanks to rising prices for insuring commercial risks.

"The current market backdrop presents an opportunity for a wide range of institutional and retail investors to gain capital efficient liquid access and diversified exposure to the Lloyd's of London insurance market," William Allen, CEO of Financials Acquisition Corp, said in a statement.

Lloyd's is made up of more than 50 insurance companies, including three London-listed firms: Beazley, Hiscox and Lancashire.

So-called "names" - high net worth individuals - also invest in Lloyd's, along with private equity firms and institutional investors.

SPACs are listed acquisition vehicles that offer target companies a way to list on the stock market without the need for an initial public offering.

They typically have a deadline by which a transaction needs to materialise before the vehicle winds down.

Following a frenzy of deals in the early days of the COVID-19 pandemic, SPACs have lost popularity as they struggled to find businesses to merge with. Others have seen lacklustre stock performance after acquiring a target.

The deal by Financials Acquisition Corp differs from a typical SPAC merger because the company has set up London Innovation Underwriters itself.

It is not the first time that public market investors in London have backed a new insurance venture. In 2020, Conduit Holdings listed on the London Stock Exchange, subsequently starting reinsurance activities.

UBS and HSBC are joint global coordinators to the Financials Acquisition deal.

($1 = 0.8227 pound)

(Reporting by Carolyn Cohn; additional reporting by Pablo Mayo Cerqueiro; Editing by Anousha Sakoui)