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Hong Kong Exchange To Allow SPACs To List From January 1


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SPACs will be allowed to list in Hong Kong from next year the stock exchange operator said on Friday. It hopes to attract listings from mainland China-based investors, market participants say


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The logo of Hong Kong Exchanges & Clearing (HKEX) is seen at the Central financial district in Hong Kong. Photo: Reuters.

 

SPACs will be allowed to list in Hong Kong from January 1, 2022, the local stock exchange operator said on Friday, becoming the latest global bourse to tap into the desire for the investment vehicles even as the frenzy from earlier this year wanes.

Hong Kong hopes to attract SPAC listings from mainland China-based investors, market participants say, after regulatory scrutiny from both Chinese and US regulators caused a sharp slowdown in Chinese listings in the United States.

Friday’s statement from Hong Kong Exchanges and Clearing also set out several adjustments to its initial proposals for a SPAC regime which it published in a consultation document earlier this year.

Some investment banks and corporate advisers had pushed back against the initial proposals, arguing they were too onerous and would make the city uncompetitive.

“The changes should be positive. The exchange has taken consideration of the market and made this regime quite commercial and practical now,” one Hong Kong capital markets banker said. “It won’t be like the US but we expect to see decent interest.”

Tweaks to the rules included lowering a requirement that a SPAC’s securities must be distributed to a minimum of 30 institutional professional investors to 20, and adjusting rules that had placed restrictions on the circumstances in which investors could redeem their shares in a SPAC.

However, even the initial proposals went too far for some. “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.

SPACs, or special purpose acquisition companies, are shell corporations that list on stock exchanges and then merge with an existing company to take it public, typically offering strong valuations and shorter listing time frames than initial public offerings.

They surged in popularity in the United States around a year ago, but the pace of capital raising has since slowed as investors were spooked by many SPACs’ poor financial performance and a regulatory crackdown led by the US Securities and Exchange Commission.

Several companies are preparing to list SPACs on Singapore Exchange, which also changed its rules earlier this year.

 

• Reuters with additional editing by Jim Pollard

 

ALSO SEE:

Bankers See China Rule Changes Reviving IPO Prospects in 2022

Hong Kong Faces Worst Quarter For Stock Listings Since Pandemic: FT

Trip.com to raise $1.4 billion in Hong Kong secondary listing

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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