Since January 1 this year, spac (Special Purpose Acquisition company) has officially “settled” in the Hong Kong stock exchange, the enthusiasm of participating institutions has increased, and four companies have submitted forms in the past half month.
The so-called “spac” is that the sponsor establishes the main body first, then raises funds in the form of IPO, and carries out M & A and integration of unlisted entity enterprises with raised funds, so as to achieve the purpose of the merged successor company to become a listed company.
“Compared with US stock spac, the SPAC mechanism of HKEx is more strict in terms of investor qualification, promoter qualification and listing scale.” Chen Gang, CO director of aide securities and Futures Research Department, told the Securities Daily that spac needs to acquire a growing unlisted company within the specified time, and its M & A objectives, M & a success rate and subsequent operation ability are uncertain. This form is similar to a “blind box”, which also brings great uncertainty to the return rate of investors. However, as an alternative to traditional IPO, spac is still of great positive significance to HKEx and investment banks. It not only provides an opportunity to attract global funds and high-quality enterprises and investors, but also is conducive to the construction of China’s multi-level cross-border capital market.
4 companies test the water of Hong Kong stocks spac
Since January 17, when Aquila Acquisition Corporation (“AAC”), the first spac company in the Hong Kong stock exchange, submitted its form, in just half a month, three more spac companies have put forward their listing agenda in Hong Kong, namely, tiger jade acquisition company (“tiger jade”) submitted its form on January 28 and Trinity acquisition Holdings Ltd submitted its form on January 31. (Trinity) and Interra Acquisition Corporation (“Interra”).
These companies are “famous”. Among them, the initiator of AAC is a member of CMB international asset management and AAC management team, and Morgan Stanley and CMB international serve as co sponsors. The sponsors of tiger jade are Taixin capital fund and Longshi capital, and UBS group acts as the exclusive sponsor. The sponsors of Trinity are “Gymnastics Prince” Li Ning, Ryan capital and astrapto, and the sponsors are JPMorgan Chase and Credit Suisse. The sponsors of Interra are Chunhua capital and ABC international asset management, and the sponsors are ABC international and JPMorgan Chase.
According to the prospectus, the areas of future mergers and acquisitions of the above four enterprises include green energy, life sciences, consumption, new retail, high-end manufacturing, medical and health care, biotechnology, etc.
Chen Mengjie, chief strategist of YueKai Securities Research Institute, said in an interview with Securities Daily: “The introduction of the SPAC listing system in Hong Kong, China, provides the market with another channel other than the traditional IPO, and attracts more companies from Greater China, Southeast Asia and even all over the world to list in Hong Kong, which can enable Hong Kong, China to continue its competitive position as an international financial center. In addition, the SPAC rules of Hong Kong, China are formulated in three aspects: investor protection, market quality and market attraction The strict rules have helped to gradually improve the quality of the Hong Kong stock market. After the future situation is further clarified, the listing threshold of SPAC on the Hong Kong Stock Exchange may be gradually reduced. “
Hong Kong stock spac is attracting world capital. Take Trinity as an example. Li Ning and lane capital founded the SPAC company Trinity Acquisition Corporation on January 22, 2021, and submitted the S-1 document to the US Securities and Exchange Commission on March 31 of that year to apply for listing on the New York Stock Exchange. At that time, the acquisition target of the SPAC company was a global consumer leisure company. The company was not further listed in the United States. Then Li Ning and Ryan capital moved to Hong Kong stocks and founded Trinity (i.e. acquisition Holdings Ltd.) on December 3, 2021, And promptly deliver the prospectus. The goal of Trinity’s M & A this time is to focus on a global lifestyle company in the consumer field that has strong growth potential in China and can benefit from the professional operation knowledge and ability of the company’s sponsors and management team.
spac mechanism is still uncertain
Why should HKEx accelerate the introduction of SPAC listing mechanism? According to the data of spacinsider, the reporter of Securities Daily found that since 2022, the number of IPOs of SPAC in the United States has been 28, with a total fund-raising amount of US $5.938 billion. Looking back from 2020 to 2021, the SPAC boom has driven the recovery of US stock IPOs. Among them, 248 spacs were listed in the US capital market in 2020, raising a total of US $83.335 billion, surpassing the traditional IPO listing mode for the first time. In 2021, the number of IPOs of American spac reached 613, with a total fund-raising amount of 162.394 billion US dollars.
In recent years, spac has been popular with investors in the U.S. capital market, but the listing mechanism of Hong Kong stock spac does not copy U.S. stocks, and there are many differences with it, and some regulatory requirements are more stringent. For example, in terms of investor requirements, US stocks allow retail investors to participate; The HKEx requires that only professional investors can participate in the trading of SPAC shares, and other individual investors can only enter the trading after the M & a transaction of SPAC shares is completed.
In this regard, KPMG said that the listed companies in the SPAC stage have no real business, which does bring a lot of uncertainty to investors, which means investment risk. Although the HKEx has fully considered various risk factors of SPAC and formulated a series of response measures when formulating the SPAC listing system, investors must know themselves and their opponents when buying and selling spac securities. They should not only consider their ability to bear investment risks, but also fully understand the rules of the game of SPAC and the background, experience and past performance of the sponsors. It is precisely because of the high requirements for investors to invest in SPAC securities that the Hong Kong Stock Exchange stipulates that only professional investors can participate in the trading of SPAC securities.
What development opportunities will the introduction of SPAC listing mechanism bring to Hong Kong stocks? Zhao Yayun, a researcher of CITIC reform and development research foundation, said in an interview with Securities Daily: “From the current situation, investment institutions and enterprises in China and Hong Kong are very interested in SPAC, which is also a good form of financing for small and micro technology enterprises. It will receive strong support from the regulatory authorities, or there will be explosive growth like US stock spac. In addition, the acquisition and listing of China concept shares through spac is also a convenient way for China concept shares to return from US stocks to Hong Kong stocks Formula, which is expected to accelerate the return of zhonggai shares. “
With the increasing proportion of direct financing and the continuous innovation of listing mode in the international market, Chinese investment banks may benefit from spac business. Guosen Securities Co.Ltd(002736) the non bank team believes that the SPAC mechanism of Hong Kong stocks will be a major development opportunity for China’s large securities companies. Large securities companies have a wide range of businesses and have accumulated mature teams in all business lines. By creating spac, they can not only contribute to the development of the country’s new economy, but also strengthen the application skills of comprehensive strength and consolidate their market position. The innovation and promotion of SPAC system is expected to become an important market force in China’s capital market reform, and promote the capital market reform in depth together with various system reforms.
