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New broom could sweep in SPACs to Hong Kong stock exchange


(ATF) The new management expected at the Hong Kong Stock Exchange could see the Asian financial hub embrace the SPAC boom that has engulfed Wall Street, reports indicate.

The boom in SPACs – special-purpose acquisition companies – has swept the US and brought avid interest from Asian financial centres like Singapore, but HKEX has so far kept quiet about the so-called blank-cheque companies.

Now HKEX is canvassing brokers about introducing SPAC listings, according to the local Apple Daily newspaper. HKEX responded that it intended to study the SPAC format.

“From time to time, we study various plans to strengthen or reform the listing system, not only to improve the competitiveness and attractiveness of the Hong Kong IPO market, but also to ensure that the quality of the market can be maintained,” the paper quoted a HKEX spokesperson as saying.

However, a SPAC launch on HKEX would be a policy about-turn for Asia’s largest bourse.

In recent years, the exchange has cracked down on reverse takeovers, which have been abused by companies in the past as a way to list poor-quality assets while avoiding the HKEX listing committee’s scrutiny.

TIGHTENING RULES

This has led to the bourse tightening its review of issuers that appear to be shell companies and it has also introduced a regime for delisting such firms.

HKEX is expected to focus on diversifying product and revenue streams under incoming boss Nicolas Aguzin, if his appointment is approved. The veteran investment banker will become HKEX’s first non-Chinese chief executive when he takes office on May 24.

While most SPACs are headquartered and focused on targets in the US, Hong Kong-based and Asia-focused SPACs have recently emerged as the second-largest geographical area to embrace the booming market. HKEX listings of SPACs would have wide market support.

Hong Kong billionaires such as Richard Li have already embraced SPACS. Li and Paypal cofounder Peter Thiel have raised about $900 million via two US-listed SPACs and are preparing a third.

“I think that the investment community in Hong Kong has a great perspective not only on opportunities in Hong Kong and China but also on the rest of Asia, a region rich with targets that could be attractive for a SPAC,” Drew Bernstein, co-managing partner of MarcumBP told the Cyberport Venture Capital Forum in November 2020.

Last year, 248 US SPACS raised $83.04 billion – almost double the $47.11 billion raised in the previous 10 years combined. As of February 18, eight SPACs sponsored by companies in Asia raised a total of $2.3 billion this year, according to Dealogic data. 

ALSO SEE:

Hong Kong set to be world’s biggest SPAC market outside US  

SPACs set to surge in Asia-Pacific as tech unicorns prepare for IPOs 

HKEX appoints Nicolas Aguzin as its first non-Chinese CEO

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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