Atom Banks calls off merger with SPAC

The challenger bank is allegedly interviewing investment banks about roles relating to an IPO. The UK-based fintech has been looking to go public for some time, having previously said it was aiming for a 2023 public launch. However, according to different source, the question of where to IPO has followed Atom.

There were concerns from the UK that Atom Bank – currently valued at just under GBP 500 million – would go public in New York after reported interest from a SPAC run by Wilbur Ross, the commerce secretary under former US President Donald Trump.

With the merger reportedly having been called off, the neobank will be looking elsewhere for its IPO plans, with London still on the cards.

The UK has been looking to reduce the number of homegrown firms listing elsewhere. The Financial Conduct Authority (FCA) published a paper in May 2022 outlining its recommendations for reforms to the London Stock Exchange to encourage more listings.

Reform of the UK listing regime

In June 2022, the Labour Party announced a review would be held, with the goal of making the UK a more attractive place for startups to go public. The review was announced in a speech by the shadow chancellor Rachel Reeves.

The FCA has proposed to create a single listing segment for equity shares in commercial companies, with a single set of eligibility criteria and a set of continuing obligations applicable to all commercial companies listed on the single listing segment but also giving them the choice to adopt a set of additional supplementary continuing obligations, thus removing the choice between premium and standard listing for new issuers.

The differences in the regulatory requirements across listing categories would therefore be based on the type of issuer and/or the type of instrument that is listed. There would therefore not be a two-tier system for listing equity shares of commercial companies as at present, and the FCA proposes that such companies would simply be denoted as having a ‘UK Listing’.

Taking the IPO route

2021 was a banner year for fintech with record private-market funding, merger and acquisition transactions, and many IPOs and SPACs completed. An estimated USD 135 billion in private capital was invested in private fintechs. It was also a massive year for US IPOs, with 388 companies going public including, 24 fintechs, through the traditional IPO and SPAC route.

But the investor mood around public market fintechs has soured since November 2021, with these stocks getting caught in the violent downward revaluation of all growth stocks. Therefore, fintech companies are putting IPO plans on hold and cutting expenses.

Delayed listings pile up, with investors fleeing high-risk and frothy assets, forcing issuers to rethink their plans to raise fresh funding in volatile public markets. The prospect of interest-rate increases combined with slowing economic growth and geopolitical tensions have set global equities on course for their worst time since the pandemic started, hurting demand for new stocks.