Hong Kong joins global bourses in letting blank-cheque companies raise funds as SPACs get the nod for initial public offerings
- SPACs raised nearly US$81 billion last year and US$139 billion this year as of October, according to Refinitiv’s data
- Most SPACs are listed in the US, but Britain, Malaysia and Singapore have changed their listing rules to compete for such listings
Hong Kong’s stock market operator will allow special purpose acquisition companies (SPACs) to list starting in January, joining global bourses from New York to Singapore in opening another fundraising avenue for start-ups.
The HKEX announcement, coming after a 45-day public consultation period, would clear the way for so-called blank cheque companies to raise capital from investors, with the purpose of buying assets – typically high-potential start-ups – within a limited period.
SPACs are created – and typically anchored by well-known public figures, including celebrities, sports icons and famous entrepreneurs – with the objective of raising capital to buy assets within a period, usually between 18 and 24 months.
Their unique business models are controversial, which partly explains why HKEX has had to conduct a wide round of consultations. The market operator, which has put investor protection at the top of its priorities, will bar retail investors from dabbling in SPACs. Only professionals with at least HK$8 million of assets will be allowed to transact in the blank cheque companies.
The Financial Services Development Council (FSDC), whose board members are appointed by the government to promote Hong Kong as an international financial centre, also gave its full support to the HKEX proposals.
The first Hong Kong SPAC listing is expected to happen soon, as financial firms have already been working with wealthy clients to be among the first to list their SPACs in the city.