02/03/21

HONG KONG: Jurisdiction explores allowing SPAC listings.

As published on cityam.com, Tuesday 2 March, 2021.

Hong Kong is considering allowing SPAC listings as the popularity of blank-cheque vehicles starts to pick up outside the US.

Special-acquisition companies (SPACS) are vehicles that raise capital through a public listing with the purpose of acquiring an existing company.

They offer private companies a faster and more predictable way to go public and have been a popular option in the US.

Nearly 180 SPACS have been filed or priced this year in New York and last month Frankfurt and Amsterdam both had their first listings.

The government announced it had asked Hong Kong’s markets regulator, the Securities and Futures Commission and the exchange operator Hong Kong Exchanges and Clearing to consider the listings.

The Financial Leaders Forum, chaired by Hong Kong’s finance secretary Paul Chan asked the parties “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.”

It comes just a day after the Hong Kong-based luxury Rosewood Hotel group announced it had filed for a SPAC listing that could raise around $400m.

There are also reports the SPAC phenomenon could make its way to the UK as Chancellor Rishi Sunak eyes ways to make the City of London competitive post-Brexit.

A review into London’s listing rules is set to be published alongside the Budget and is reportedly looking at whether the UK should become more SPAC-friendly.

Currently SPACs are not eligible for listing on the LSE’s premium segment because they don’t meet the independence and track record requirements.

Arguably a London-listed Spac is more attractive to a big name sponsor because they don’t need shareholder approval to complete the acquisition unlike in the US.