Financials Acquisition plans to wind up its operations and will pay the creditors through a liquidation process. Credit: SERSOLL / Shutterstock.com.

Special purpose acquisition company (SPAC) Financials Acquisition has scrapped a deal to combine business with London Innovation Underwriters (LIU), according to a stock exchange filing.

Financial Acquisitions formed LIU as part of the strategy to deploy funds in the Lloyd’s of London insurance market and build a reinsurance book with a capacity of up to £1bn ($1.25bn).

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On October 30 this year, the parties entered the business combination agreement and proposed plans to raise funds to deploy in the insurance market.

Under this deal, LIU planned to raise up to £300m by issuing new shares of the company. However, the deal was terminated as LIU failed to secure sufficient cash funds due to volatile capital markets to meet the minimum cash condition under the transaction.

With the scrapping of the deal, a shareholder meeting planned to be held on 14 November 2023 to discuss the business combination agreement has been cancelled by Financials Acquisition.

The SPAC had a deadline of the end of this year to use the funds secured for the takeover.

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Commenting on the deadline for closing the deal, Financials Acquisition said: “The company believes that it is unlikely that it will be able to complete a business combination on or before 31 December 2023, being the deadline for completion under the company’s memorandum and articles of association, and the company does not plan to seek a further extension period to the business combination deadline.”

The company plans to wind up its operations and will pay the creditors through a liquidation process.

Furthermore, a liquidator will be appointed to manage the ceasing of operations.

LIU said that “it has decided to cancel its proposed admission to the London Stock Exchange, but will consider exploring alternative options to pursue its strategy”.