Hong Kong’s exchange wants to attract new business with its SPAC rules.
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Hong Kong’s stock exchange will allow special-purpose acquisition companies to list from early 2022, after tweaking its proposed framework for handling listings of blank-check companies.
The exchange published its SPAC rules on Friday, following a public consultation that began in September, and said the listing regime would take effect on Jan. 1. SPACs are shell companies that raise money from investors and go public on stock exchanges before finding businesses with which to combine.
Like its regional rival Singapore, which has already introduced new SPAC rules, Hong Kong’s exchange wants to attract new business from the deal makers that put these vehicles together and the startups that merge with them to go public, while trying to look after investors. In recent years, numerous Asian investment firms and tycoons have rushed to U.S. stock exchanges to list SPACs.
The Hong Kong exchange, a unit of Hong Kong Exchanges & Clearing Ltd. 388 -0.88% , has spent years ridding itself of problematic shell companies, which helps explain its relatively cautious approach.
The exchange’s framework applies a similar level of scrutiny to SPACs as it requires for initial public offerings. Some investment bankers and private-equity investors have said some of the proposed requirements were too rigid, meaning Hong Kong SPACs wouldn’t be widely used.
Hong Kong’s stock exchange made several minor changes to the rulebook it had initially proposed, after receiving 90 responses to the consultation. Among other things, SPAC shares must be sold to at least 20 professional institutional investors, instead of 30. A proposed cap on warrants will also be relaxed so they can’t account for more than 50% of shares in issue if exercised, rather than 30%.
The exchange has also eased rules on the minimum amount of funds that must be injected by outside investors as part of the SPAC deal-making process. These investments are known as private investment in public-equity deals, or PIPEs.
The new framework reflects HKEX’s commitment to fostering “Hong Kong’s reputation as the region’s premier capital-raising market,” Chief Executive Nicolas Aguzin said.
—Jing Yang contributed to this article.
Write to Quentin Webb at [email protected]
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Appeared in the December 18, 2021, print edition as ‘Hong Kong’s Stock Exchange to Allow Blank-Check Listings.’
