On March 18, Hong Kong stocks ushered in the listing of the first special purpose acquisition company (SPAC) – aquala acq-z. the company is also the first spac to submit a form to the Hong Kong stock exchange. It took only two months from the submission of the application to the successful listing. Morgan Stanley and China Merchants Bank International are the co sponsors of aquala acq-z.
In the morning, Ou Guansheng, chief executive of HKEx, said that the introduction of SPAC listing mechanism was an important market development work of HKEx. The new mechanism has opened up a new way for issuers to list, and also made the listed products in the Hong Kong market more diversified. At the same time, it helps the HKEx to foster some promising new stars of enterprises to thrive and move towards success.
Source: WeChat official account of Hongkong exchange
“The market shows great interest and huge demand for this new way of listing spac. We are happy to see the first spac listed successfully today. We hope to see more spac sponsors listing their companies in Hong Kong in the coming months.” Ou Guansheng said. It is reported that as of March 17, the HKEx has received listing applications from 10 spacs.
It is reported that the subscription and trading of aquala acq-z securities issued this time are limited to professional investors. Its trading units are 105000 shares per hand, with an initial value of HK $1.05 million per hand.
raised HK $1001 million
99 investors participated in the subscription
According to the announcement, aquala acq-z will offer about 1001 million class A shares and 500325 million listing warrants, and class A shares will account for 80% of the total issued shares immediately after the completion of the offering. Based on the issue price of HK $10.00 per class a share, the total proceeds from the offering of the company will be HK $1001 million.
Aquila acq-z announcement
The announcement shows that the securities offered by aquala acq-z were moderately oversubscribed. The total number of investors in the offering is 99, of which 40 institutional professional investors hold 75.03% of class A shares and listing warrants respectively.
It is reported that aquala acq-z submitted its listing application to the Hong Kong Stock Exchange on January 17 this year. The sponsors are China Merchants Bank International Asset Management Co., Ltd. (hereinafter referred to as China Merchants Bank International Asset Management) and Jiang Rongfeng, Ling Yao, ledi and Wu Qian (collectively referred to as “individual sponsors”). All individual promoters are employees of CMB international and indirectly hold the issued Class B shares of aquala acq-z through its wholly-owned company AAC MGMT Holding Ltd.
CMB international asset management is an asset management company wholly owned by CMB international. Since its establishment in 2014, CMB international has invested in more than 150 companies, covering various new economic fields, including meituan comments on landing Hong Kong stocks in 2018 and burning stone medicine listed on NASDAQ Global Market in 2020.
The aquala acq-z program focuses on companies in Asia, especially China, in new economic fields with technology enabled (such as green energy, life sciences and advanced technology and manufacturing).
According to the listing rules, aquala acq-z shall announce the M & A transactions of special purpose acquisition companies within 24 months after the listing date, and complete the M & A transactions of special purpose acquisition companies within 36 months after the listing date.
At the same time, before the completion of the M & a transaction, the subscription and transaction of Hong Kong stock spac are limited to professional investors. Therefore, some Hong Kong stock analysts believe that spac may have relatively low liquidity after the listing of Hong Kong stocks and before the completion of M & A. “Referring to the stock price trend of US stock spac, we can also see that generally, the stock price will start to perform only when there are acquisition targets.”
spac pile up table
On March 15, a spac (HK) acquisition Corp. (hereinafter referred to as a spac (HK) acquisition) submitted an application for Hong Kong stock listing, which is also the tenth spac to submit a form.
The initiators of a spac (HK) acquisition are a spac holdings, yuchengkejin, de Oro and Huitong Yongli. Among them, yuchengkejin is indirectly held by Zheng Zhigang with 75% equity. Zheng Zhigang is currently the executive vice chairman and CEO of Shanghai New World Co.Ltd(600628) development. The companies he participated in include Shanghai New World Co.Ltd(600628) development, Shanghai New World Co.Ltd(600628) Department Store China, Chow Tai Fook and Xinchuang group.
A spac (HK) acquisition plans to focus on large consumer industries, especially enterprises that use technology to promote their growth and development in Asia.
Before a spac (HK) acquisition, spac initiated and participated by many star PE Institutions and capital masters submitted listing applications to the Hong Kong stock exchange. Including Pisces led by Jiao Zhen, President of CDH investment; Trinity sponsored by Li Ning and Ryan capital; Tiger jade initiated by Taixin capital fund and Longshi capital; Chunhua capital team, Agricultural Bank of China International Asset Management participated in the launch of Interra, etc.
KPMG China expects that about 10 to 20 spacs will be listed in 2022. Although this number is different from the listing of more than 600 spac new shares in the United States in 2021, the focus of Hong Kong’s SPAC system is not on quantity, but on quality.
Meanwhile, KPMG China believes that the first batch of target companies will complete the merger transaction with spac as soon as the end of 2022. It is expected that the first target companies to complete the merger transaction are mainly start-ups and new economy enterprises. As the HKEx requires spac to raise at least HK $1 billion and the valuation of the target company is at least 80% of the raised amount, the target company should have a certain scale.
Deng Haoran, partner of KPMG’s China capital market consulting portfolio, said that Hong Kong has a large number of high-quality asset management institutions and family offices. In addition to having a large amount of capital, they also have rich experience in M & A or asset management, many of which have been involved in SPAC With the formal implementation of Hong Kong SPAC system, these asset management institutions and family offices interested in participating in Hong Kong spac are expected to establish an ecosystem and give full play to their advantages.
“They can explore potential target companies through their unique vision and rich contacts. On the one hand, they can use their expertise to create value for the target company, and on the other hand, they can enable other participants to share the results by transforming the potential of the target company into return on investment.” Deng Haoran predicted that in the future, many high-quality enterprises will intend to list in Hong Kong through the SPAC system, injecting impetus into the development of the SPAC system in Hong Kong.
