A SPAC backed by China Merchants Bank applied to list in Hong Kong late on Monday, the first company to do so since new rules allowing such listings took effect at the start of this year.
Interest in SPACs – special purpose acquisition companies that raise cash to buy private firms and take them public without a traditional initial public offering (IPO) – is starting to shift to Asia, with two SPACs set to list in Singapore later this month.
Monday’s filing was by Aquila Acquisition Corporation, whose ultimate parent is China Merchants Bank.
The filing said Aquila is target acquiring “a technology-enabled company in ‘new economy’ sectors (such as green energy, life sciences and advanced technology and manufacturing) in Asia, with a focus on China.”
Hong Kong changed its rules to allow SPACs late last year, and the rules took effect on January 1.
Hong Kong sought to attract SPAC listings from mainland China-based investors, market participants said in December, after scrutiny from both Chinese and US regulators caused a sharp slowdown in Chinese listings in the United States.
The Hong Kong Exchange made tweaks to its proposed rules, such as lowering a requirement that a SPAC’s securities must be distributed to a minimum of 30 institutional professional investors to 20, and adjusting restrictions on the circumstances in which investors can redeem their shares in a SPAC.
However, not everyone was in favour of the exchange’s move. “SPACs are unsuitable for a market such as Hong Kong which has historically suffered from manipulation of shell stocks,” the Asian Corporate Governance Association said in its response to HKEX’s initial proposals.
- Reuters with additional editing by Jim Pollard