Empowering Hong Kong as the “Asian SPAC Hub”
In 2021, the Hong Kong Exchanges and Clearing Limited (HKEX) introduced new listing rules Chapter 18B, allowing SPACs to list in Hong Kong. These rules provided clarity on the requirements for SPACs throughout the listing process, covering aspects such as fundraising scale, exit mechanisms, and restrictions, thereby bolstering Hong Kong’s position as an attractive destination for SPAC listings.
As an international financial center, Hong Kong maintains an open and welcoming approach to the development of SPACs and has fostered a conducive environment through continuous enhancements in regulatory measures and market rules. With the SPAC market in Hong Kong poised for continued growth and maturation, it is anticipated that an increasing number of SPACs will opt for Hong Kong as their listing venue, drawing more investors and companies into the fold, with the expectation that Hong Kong will emerge as the “Asian SPAC Hub” in the foreseeable future.
Advantages of Hong Kong SPACs
Financial Markets and Regulation
Hong Kong boasts a robust financial market and regulatory framework. The Securities and Futures Commission (SFC) of Hong Kong provides clear guidance and regulations for the oversight of SPACs, safeguarding the interests of investors. This assurance instills confidence in investors and encourages more SPACs to opt for listings in Hong Kong.
International Investor Base
Hong Kong has a broad international investor base, including institutional investors, private equity funds, and high-net-worth individuals. This diversity presents SPACs with a multitude of avenues and financial resources, thereby facilitating successful operations, both pre-listing and post-listing.
Abundant Investment Opportunities
As a global financial hub, Hong Kong hosts a plethora of startups, growth-stage companies, and innovative enterprises. This dynamic landscape offers SPACs a wide array of investment prospects, enabling them to seek suitable target companies for mergers or acquisitions.
Professional Service Providers
Hong Kong is home to a multitude of highly skilled professionals in the fields of law, accounting, and consulting, all endowed with extensive experience and expertise. These experts are well-equipped to aid SPACs at every juncture, from pre-listing to post-listing, delivering indispensable legal, financial, and strategic advisory support.
Convenient Listing Environment
The Hong Kong Exchanges and Clearing Limited (HKEX) presents SPACs with specialized listing rules designed for convenience. These rules offer flexibility and ease for SPAC listings, ensuring a swift and efficient streamlined process and the achievement of their business goals.
Integration with the Mainland Market
Hong Kong’s strategically advantageous geographical position aligns it closely with the mainland Chinese market. This proximity empowers Hong Kong SPACs to seamlessly tap into investment opportunities and resources in mainland China, providing investors with a diverse range of investment options.
SPAC 2.0 Initiative
On April 19, 2023, the “Hong Kong SPAC Listing and Merger, SPAC 2.0 Version Proposal Summit Forum” was successfully held at K11 in Hong Kong. During the event, Mr. Jason Wong, Chairman of Norwich Capital Limited, renowned as “Asia’s SPAC Godfather”, highlighted the importance of effectively balancing the interests of promoters, investors, and merger target companies in the introduction of the SPAC listing model in Hong Kong. He put forth several pragmatic suggestions aimed at enhancing the allure of Hong Kong SPACs, fostering a thriving industry development.
According to Mr. Jason Wong, the initiatives by the Hong Kong Stock Exchange to attract high-quality promoters, increase valuation constraints on target mergers, and regulate merger transactions are commendable steps that effectively address the shortcomings of the traditional U.S. SPAC model. The focus now lies in optimizing and refining a balance between the interests and expectations of investors, promoters, and target companies, so as to attract high-quality target companies for rapid fundraising and listing without compromising the overall quality of the market, and ultimately showcase the unique advantages of Hong Kong SPACs.
