Is the SPAC boom over? Asia, US trades seem to be going well

It’s been a slow and cautious start to the SPACs that have launched in Hong Kong and Singapore in recent months.

George Rose | Getty Images, Reuters

It’s been a slow and cautious start to the SPACs that have launched in Hong Kong and Singapore in recent months – in stark contrast to last year’s SPAC boom in the US which also succeeded.

SPACs are special purpose acquisition companies. They are shell companies that raise capital in an initial public offering and use the cash to merge with a private company to take it public, usually within two years.

Only one SPAC launched in Hong Kong in the first quarter and raised $128 million, while three SPACs launched in Singapore raised a total of $334 million, according to data analytics firm Refinitiv, according to data analytics firm Refinitiv. data analytics company Refinitiv.

“This may reflect investors happily playing the patience game, rather than retail investors in the US, who in recent years have pursued higher SPACs in [the] Neil Campling, head of technology, media and telecom research at Mirabaud Equity Research, said it would get a ‘hot start-up’.

Among the three SPACs listed in Singapore are Acquisition of Vertex Technology and Pegasusboth last traded below their asking price of S$5 ($3.60).

In Hong Kong, Aquila Acquisition launched its SPAC in March, which is also trading below its asking price of HK$10 ($1.27). Hong Kong still has 10 other SPAC applications as of mid-March, according to the country’s stock exchange.

SPAC listed in Hong Kong and Singapore

SPAC Change Proceeds
Vertex Technology Acquisition Corp Singapore 125.87 million USD
Asian Pegasus Singapore $109.83 million
Novo Tellus Alpha Acquisition Corp Singapore $44.63 million
Aquila acquires Corp Hong Kong 127.82 million USD

The sluggish performance from the start will be an initial disappointment for Singapore, which has set its sights on attracting SPACs in hopes of revitalizing its popular IPO market.

Hong Kong, on the other hand, has taken steps to reduce speculative trading by banning retail from participating in SPAC trading before the merger phase takes place.

“I would describe the SPAC environment in Asia as being wary of the volatility in the US over the past two years and the general practice of ‘slow and steady wins the race’,” Campling said.

In my experience, if you can provide a Chinese CEO with a quick and simple way to raise capital, there will be no shortage of participants.

Drew Bernstein

President, MBP

Meanwhile, the US had a record year with more than $160 billion raised on US exchanges in 2021 – almost double the amount raised the previous year, according to data from SPAC Research.

But even the red hot SPAC market in the US seems to be struggling to find direction this year.

US Securities and Exchange Commission has begun to dismantle SPACwith a series of new rules addressing claims of incomplete information and inadequate protection against conflicts of interest and fraud.

The CNBC SPAC Post Deal Index – which includes SPACs that have completed their mergers and taken their target companies public – has fallen by about 20% in January of this year, from a peak in February 2021. However, it has partially turned back on.

Tail for Hong Kong and Singapore

However, the situation is still searchable for companies looking for SPAC listing in Asia, according to analysts.

Investors may also be looking to cash in on their previous purchases, they said.

According to Drew Bernstein, co-founder and president of audit, Chinese unicorns — or startups with a valuation of at least $1 billion — are running out of private capital to mine, and that could be. make them look up the SPAC listing in Hong Kong. MBP consulting firm.

A SPAC merger in Hong Kong could be an attractive option for mainland Chinese companies looking to access capital…

Drew Bernstein

President and Founder, MBP

Read more about China from CNBC Pro

As for Singapore, it could “catch up” from the recent “strong increase” in private equity investment in Southeast Asia, Bernstein said.

“We expect an explosion of emerging growth companies driven by favorable demographics and digital adoption in the region. For some of them, a merger with SPAC Singapore could be the a great way to access growth capital that is close to hoping in a market with strong regulatory protection,” he said.

Hong Kong or Singapore?

Hong Kong and Singapore traditionally compete for Asia’s financial hub status, analysts told CNBC, but each has different propositions when it comes to SPACs.

Campling said Hong Kong would be a more natural fit for transactions in China given its proximity to the mainland.

It is also a larger market than Singapore.

“Hong Kong is a more liquid market and that would be a natural hunting ground for larger deals,” Campling said.

“Although Hong Kong has seen a hit from a tougher environment than in the US and as such, some international funds that may be interested in HK-listed deals may now prefer to search invest in other parts of Asia, such as Singapore,” he said in an email.

The Chinese city is also touting itself as a market for quality deals, as opposed to attracting a large number of deals, according to Campling.

To do so, it has established more stringent listing requirements. Under those rules, in addition to allowing only high net worth institutions and individuals to purchase shares in SPACs prior to the acquisition period, SPACs must also attract new investors at the time of the merger. import.

“In general, it seems [Hong Kong] Campling said it is attracting new economic ventures and Singapore.

However, both countries will have “well-funded and highly regarded” state-backed financial institutions, institutional investment firms, private equity advocates and entrepreneurs, he added.

– CNBC’s Yun Li contributed to this report.

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