Hong Kong’s first SPAC debuts

Hong Kong’s first SPAC listing ended on Friday, with another nine in the works, as the city seeks to establish itself as a base for centralized drum testing firms. into China and Asia.

The deal by Aquila Acquisition Corp., which raised the equivalent of about $128 million, comes amid unusual volatility in Chinese stocks, fueled by a range of concerns including a potential US sell-off, lockdowns, and lockdowns. Covid-19 and the war in Ukraine. Hong Kong’s Hang Seng Index recently hit a multi-year low and on Wednesday posted its biggest rally since 2008.

Special-purpose buyout firms are cash companies that first raise money from public investors and list on an exchange, then hunt for private companies to merge. They have been touted as an affordable alternative to initial public offerings, although regulators in the US have tightened scrutiny of these investment vehicles after a wave of activity.

Nine other SPACs have applied to list in Hong Kong, supported by a group of mainly Chinese investors and entrepreneurs. Those backers include Wei Zhe, a former Alibaba Group Holding Ltd.

operating; Li Ning, billionaire Chinese gymnast; and Norman Chan, the former central banker who helped steer Hong Kong through the Asian financial crisis.

Because investors can vote on the proposed merger and can choose to claim their money back, blank check deals are considered relatively flexible.

“It’s probably one of the few things that you can value in a market context like the one we have this week,” said Eliot Fisk, a consultant and former head of the European equity markets organization. Asia at JPMorgan Chase & Co., talking about Hong Kong. SPAC.

Michael Jiang, president of Aquila and general manager of international asset management company CMB International Asset Management Ltd.

Mr. Jiang said: “SPAC is a versatile and valuable investment tool for investors in today’s market conditions.

Aquila, named for the constellation represented by an eagle, seeks merger targets in new economic sectors such as green energy, life sciences and advanced technology in Asia, important China is the center. It said the deal was “moderately oversubscribed,” with 99 investors participating, including 40 institutions.

Both Singapore and Hong Kong jumped into the ring last year by releasing the framework after public consultation, even as US interest waned.

Singapore has held three SPAC listings since allowing these vehicles in September.

Hong Kong allowed the listing of SPACs from the beginning of this year. The city’s markets have long been plagued by problematic shell companies and exchange operators, the Hong Kong Exchange and Clearing Ltd.

imposes strict requirements on such transactions.

Private companies are flooding into special purpose acquisitions, or SPACs, to bypass the traditional IPO process and go public. The WSJ explains why some critics say investing in these so-called short-testing companies isn’t worth the risk. Illustration: Zoë Soriano / WSJ

Registration and trading of SPAC shares is limited to professional investors – that is, institutions or individuals with at least HK$8 million, or approximately $1 million, in their portfolio private. Individual investors can only trade shares after the target has been made public by merging with SPAC.

Exchange data shows: Trading in Aquila shares on Friday was fairly sparse, with just HK$15.5 million, or about $2 million, changing hands mid-afternoon.

Backer Aquila, Hong Kong-based CMB International Asset Management, has $3.2 billion under management at the end of 2021 across private equity, stocks and bonds. It is a subsidiary of Merchant Bank of China Have.

therefore partly owned by the giant Chinese Merchants Corporation.

Mr. Jiang said the asset manager was planning to launch a second SPAC after Aquila has merged with one target. “We hope that SPAC will become a recurring part of our business,” he said. “There are a lot of Chinese startups looking to list in Hong Kong. Many of them will find SPAC an attractive path to get there. ”

Write letter for Jing Yang at and Dave Sebastian at

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