Friday, April 23, 2021
Martin Hennecke

HKEX eyes SPACs amid US frenzy
Hong Kong is exploring whether to allow special purpose acquisition companies to list in the financial hub, and jump into a market that has sparked a frenzy of US dealmaking. The government has asked the Hong Kong Exchanges and Clearing (0388) and the city's financial regulator to look into having SPACs list, says Financial Secretary Paul Chan Mo-po. The aim is to allow the new fundraising arrangements, while upholding investors protections, Chan said in an interview with Bloomberg Television yesterday. "We are looking at it seriously," he said, without providing a time-line. On Monday, the Securities and Futures Commission and the HKEX outlined the latest developments of SPACs in global markets at the Financial Leaders Forum, chaired by Chan. Most SPACs so far have listed in the United States. They raised US$60 billion (HK$468 billion)in the first two months of 2021, Dealogic data showed, already more than 70 percent of 2020's annual deal value. Hong Kong billionaires including Li Ka-shing, Richard Li Tzar-kai and Adrian Cheng Chi-kong are also planning to raise such funds in America. A SPAC is a shell company whose only purpose is to raise funds through an initial public offering and then buy some promising but not very profitable company - giving the acquired company a backdoor listing, according to Andrew Wong, chairman and chief executive at Anli Securities, and a columnist for The Standard. Earlier yesterday, a Bloomberg report quoting Chan, that Hong Kong may further raise stamp duty on stocks, caused ripples among investors. However, in the TV interview, Chan said that the government "has no plans to withdraw the hike and isn't at this time planning any more increase."

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