Thousands of miles from Wall Street, the boom in blank check businesses is happening in a region where major stock exchanges do not allow companies to raise money for unspecified uses.
In mainland China, Hong Kong and Singapore, investment firms controlled by tycoons and money managers have collectively raised billions of dollars on the New York Stock Exchange and Nasdaq Stock Market over the past year through special acquisition tools, showing just how far the SPAC boom has been.
The vehicles are listed shell companies with ready-to-use liquidity to invest in – and merge with – private companies. They have been touted by investment bankers as an easier way for startups to go public. If a SPAC fails to find a merger target within a deadline, usually two years, investors can withdraw their money.
On Feb. 18, eight SPACs sponsored by companies in Asia raised a total of $ 2.3 billion this year, according to data from Dealogic. The amount is small compared to what has been raised by US companies, but it is already higher than the total of SPACs in the region for all of 2020. Bankers say more issuances are likely to be made, including from private equity groups.
“This is a compelling amount of capital that all major private equity and venture firms in Asia will consider,” said Udhay Furtado, co-head of Asia Equity Capital Markets at Citigroup Inc.