The record £1.35 billion recently raised by Vallares, a cash shell company co-sponsored by Nathaniel Rothschild and former BP executive Tony Hayward, has again put the spotlight on this type of entity and attracted a flurry of comment in the financial media. In truth however, Vallares is merely the latest and most striking embodiment of a market trend of an increasing number of equity offerings and listings of these vehicles over the last few years, which includes a line of precedents such as Justice Holdings, Vallar, Horizon Acquisition, Resolution Limited and Sherborne Investors.
As the profile of this type of structure increases, and at a time when certain institutional investors are finding themselves increasingly constrained, not least by the additional capital requirements imposed by Basel III and the Capital Requirements Directive, we expect this to be a structure of interest to many investment managers going forward. However, the commercial, structural and legal issues arising in the context of these types of listings can be complex and require a careful navigation of the relevant listing regime. This Stay Current examines the recent return of cash shells to prominence in the London equity markets and discusses some of the key legal issues associated with this type of entity, as well as the developing market practice arising from recent listings.