HONG Kong is exploring SPAC to list in the Asian financial hub

4 Mar, 2021 01:12
source: Singularity Financial

Singularity Financial Hong Kong March 4, 2020 – HONG Kong is exploring whether to allow Special Purpose Acquisition Companies (SPAC) to list in the Asian financial hub, according to a government statement, indicating that a largely US phenomenon could be going global.

A SPAC is a blank-cheque company that raises money through an initial public offering (IPO) with the intention of merging with another firm, allowing that business to list more quickly.

Most SPACs so far have listed in the United States. They raised US$60 billion in the first two months of 2021, Dealogic data showed, already more than 70 per cent of 2020’s annual deal value.

At the current rate, the world’s new generation of unicorns will all be listed in New York via SPACs. The city is once again the IPO centre of the world.

This gush of funding is putting pressure on rival stock exchanges from London and Singapore to Hong Kong to rewrite their listing rules to attract the so-called “blank cheque” companies.

London’s tough regulations, for example, may allow Amsterdam to become Europe’s SPAC centre, according to my colleague Chris Hughes. Already there are plans to make Britain more competitive. Here in Hong Kong, the question is: should the markets jump into the SPAC race?

Hong Kong’s markets regulator, the Securities and Futures Commission (SFC), and exchange operator Hong Kong Exchanges and Clearing (HKEX), briefed a forum of top financial leaders in the city about latest developments in SPACS on Monday, according to the statement issued that evening.

Hong Kong’s Financial Secretary Paul Chan had asked the two organisations “to explore suitable listing regimes to enhance the competitiveness of Hong Kong as an international financial centre, while safeguarding the interests of the investing public.”

Chan said in an interview with Bloomberg TV on Tuesday that the government was seriously looking into allowing SPACs.

Several Hong Kong tycoons, including Richard Li, the son of Hong Kong’s richest man Li Kashing, have set up SPACs already or are working on doing so.