NEW YORK: Former Barclays Plc banker Makram Azar, who listed his special-purpose acquisition company (SPAC) last year to scout for European tech unicorns, warned SPACs could come under yet more scrutiny by United States regulators after a crackdown earlier this year cooled off the market.

       Stiffer oversight by the US Securities and Exchange Commission (SEC) “put a lid on the market that way,” Azar said in an interview in Riyadh on the sidelines of Saudi Arabia’s flagship investment forum. “They may continue to adjust the rules by the way, it’s not over yet.”

       After a record rush of initial public offerings (IPOs), SPAC IPOs began to slow in the second quarter as the SEC tweaked certain accounting rules amid intensifying scrutiny from US financial regulators.

       While the issuance of new SPACs has slowed, many blank-cheque companies are still racing to spend the almost US$200bil (RM831.06bil) they’ve raised since the middle of last year.

       “The investor community was throwing money at SPACs,” Azar said. “Now if they see a team that is not really knowledgeable, they are not going to get their money.”

       At its peak, the market for SPACs “became a sort of a bubble and all sorts of people were not equipped to be SPAC sponsors” and were “doing bad deals,” he said.

       “That really disrupted the market,” he said. “It needed to get filtered and now we’re going through that process and soon if you’re a nobody you’re not going to be able to raise money through SPACs anymore. Which is a good thing, it should be limited to people with experience.”

       Even as listings and mergers by blank-cheque sponsors have slowed, fundraising through SPACs, which gather money before selecting a business to acquire, has led to deals for WeWork and SeatGeek in the past month alone.

       Azar and dealmaker Scott Freidheim raised US$345mil (RM1.43bil) in December after boosting the size of their blank-check company’s US IPO.

       The SPAC will primarily look for targets in the European technology, media and telecommunications industry as well as the region’s financial technology sector.

       Unlike last year, which saw more IPOs through SPACs than via regular listings, blank-check companies account for less than half this year, according to Azar, who expects the market to settle at 30% or 40%. — Bloomberg