Hong Kong Stock Exchange to Allow SPAC Listings Next Month
Hong Kong Stock Exchange to Allow SPAC Listings Next Month
(Bloomberg) -- Hong Kong unveiled its rulebook for blank check companies, allowing for listings at the start of next year while setting a strict regime to safeguard investors.
After a consultation period on proposed rules, the city’s exchange decided to keep in place a fund-raising threshold of HK$1 billion ($128 million), while trimming the minimum required backing of institutional investors to 20, according to a conclusion released by the Hong Kong Exchanges & Clearing Ltd. on Friday. Retail investors are still barred from investing in the special purpose acquisition companies as proposed.
Hong Kong has taken a careful approach to allowing SPAC listings after in the past being hit by scandals surrounding shell companies. The vehicles earlier this year triggered a deal making frenzy in the U.S., which has since abated. Hong Kong families have played a “major role” in U.S. SPACs, the Family Office Association Hong Kong said in November.
“Throughout the process of creating the new SPAC regime, we have been in continuous dialogue with stakeholders to understand market needs, practice and concerns,” HKEX Head of Listing Bonnie Chan said. “The new rules will be implemented broadly as proposed, with amendments to accommodate some commercial factors whilst ensuring the quality of listings.”
The go-ahead could provide a bump in listing in the financial hub, which has seen a a significant slowdown in its initial public offerings in the second half of the year amid a crackdown in China and increased market turmoil.
Read more: H.K. IPOs Poised to Be Asia’s 2021 Worst Performers: ECM Watch
The final form of Hong Kong’s SPAC listing regime also eased its dilution after warrant issuance to 50%, from the proposed 30%, in a move to match Singapore’s SPAC regime.
At a de-SPAC, shareholders could vote against the deal, but still have the option to redeem their investment, HKEX said. The separation of vote and investment redemption came in response to market demand.
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