Photographer: Paul Yeung / Bloomberg
Photographer: Paul Yeung / Bloomberg
The billionaires in Asia have just started going to blank check companies, but now the SPAC boom on Wall Street is down.
After a frenzy of listings for special-purpose companies – 326 raised more than $ 101 billion this year – the entire pipeline is now in limbo due to regulatory overhang, including a number of transactions by Asian investment firms and nationals.
Gateway Strategic Acquisition Co., backed by buyout firm Gaw Capital Advisors Ltd., Artisan Acquisition Corp., supported by Adrian Cheng of New World Development Co. and Hony Capital Acquisition Corp. are some of the Asian SPACs waiting in the wings to list in the US.
They all submitted more than two weeks ago, which means they could launch the initial public offering, but have not yet done so. According to people familiar with the matter, they are now waiting for the sentiment in the market to improve, who are not authorized to speak in public and are asked not to be identified.
The US Securities and Exchange Commission put a damper on the SPAC party this week by indicating new guidelines that warrants, issued to early investors in the transactions, may not be considered as equity instruments, but rather as liabilities for accounting purposes. It threatens to disrupt the filing for companies with blank checks until the issue is resolved.
This is bad timing for entrepreneurs in Asia. In addition to those waiting to start, more spaces are being planned by people like Hong Kong’s richest real estate mogul Li Ka-shing, New Frontier Group Ltd., backed by China-focused Nan Fung Group and private equity firm EmergeVest.
The SEC’s latest actions undoubtedly mean that clearing SEC registration statements from Asian SPACs (and indeed SPACs elsewhere in the world) is likely to take longer as the issuer considers its impact and the likely related remarks of SEC staff address. Said Thomas Vita, corporate finance partner at global law firm Norton Rose Fulbright.
Asian SPACs raised $ 3.1 billion this year, surpassing the total number of such transactions by 2020. Although still small, the rapidly growing volume highlights the increasing attractiveness of SPACs on the businesses in the region.
Record Spree
Asian SPACs have raised more this year than in the whole of 2020
Source: Bloomberg
A cool down in the SPAC market may not be bad news, given the bubbly quality it has achieved.
“The SPACs that were recently listed in the US before the SEC let the orange light flicker do not necessarily have the first advantage over aspiring Asian sponsors and promoters,” said Robson Lee, partner at Gibson Dunn. The increase in the number of SPAC listings in the United States does not guarantee successful mergers with viable target companies, and it appears to be a phenomenon of market madness, he added.
The US regulator also warned that candidates are mentioned that structuring as a SPAC is not an end in itself avoid disclosing important information to investors. To top it off, SPACs are no longer buzzing as they used to be, and even going straight underperforming traditional IPOs.
‘It will be interesting to see what happens on the regulatory front in the US. Asian regulators and stock exchanges will keep a close eye, ”says Johannes Juette, partner at law firm Clifford Chance.
– Assisted by Vinicy Chan