Eligibility of SPACs for UCITS funds

On 17 December 2021, the CSSF updated its UCITS FAQ by clarifying the possibility for Undertakings for Collective Investment in Transferable Securities (“UCITS”) to invest in Special Purpose Acquisition Companies (“SPACs”).

This UCITS’ investment in SPACs is permitted provided a certain number of conditions are met:

  • SPACs must qualify as transferable securities;
  • Before investing in SPACS, UCITS must perform a detail risk assessment covering all material risks to which the UCITS will be exposed as a result of the investment (eg liquidity risk, dilution, conflicts of interest or uncertainty as to the identification, evaluation and eligibility of the target company);
  • In principle, a maximum of 10% of the UCITS’ NAV should be invested in SPACs provided such SPAC investments fulfil all applicable eligibility requirements, are appropriately disclosed in UCITS prospectuses and are captured adequately by the risk management process of the UCITS. On a case by case basis, the CSSF can derogate from this 10% limit.

If you would like to read the CSSF FAQ, click here.