Mass exodus of public shareholders from London metaverse fund as bubble bursts
INVESTORS have pulled £120m from a London-listed metaverse investment company amid flagging public interest in the much-hyped technology.
More than 99pc of public shareholders in a special purpose acquisition company (Spac) set up to invest in the field have withdrawn their money from the business.
Hiro Metaverse Acquisitions I raised funds in February last year to purchase a gaming business or a company working on the technology.
Interest in the metaverse – a kind of 3D online space that combines gaming, virtual reality and digital commerce – was running high at the time, with Facebook’s Mark Zuckerberg claiming it would be the next phase of the internet.
However, consumer adoption has been slow and Meta, Facebook’s parent company, has spent tens of billions of dollars on development with little to show for it. Interest in artificial intelligence has also eclipsed the metaverse.
In a Spac deal, a company with no operations raises money through a public listing. It must then use the cash it raises to buy a business within a certain timeframe. If it fails to complete the deal, it has to return the money to its investors.
Spacs were championed as an easy and cheap way of bringing fast-growing tech companies to the stock market. Interest in Spacs ballooned during the Covid pandemic thanks to low interest rates and surging valuations.
UK regulators tweaked City rules to encourage more of the investment companies to launch in London, following a glut of listings in the US.
Hiro’s Spac, chaired by Sir Ian Livingstone, the co-founder of Games Workshop, was one of the few companies to list using the deal structurae on the London Stock Exchange.
However, the number of Spac transactions has plummeted over the last 18 months.
The total raised in Spac deals fell from $163bn (£132bn) in 2021 to $13.4bn last year, while dozens have collapsed. Several companies that went public through a Spac deal have since seen their valuations plunge amid a sell-off of the tech sector.
Last month, a rival Spac launched in London by investor Hambro Perks announced it would shut down its operations after failing to close a deal.
Hiro has already asked investors for more time to make a possible acquisition, extending its deadline until February 2024.
Hiro Capital, the Spac’s main sponsor, has previously invested in Telltale, the studio behind computer games based on the TV dramas Game of Thrones and The Walking Dead.