Photographer: Paul Yeung / Bloomberg
Photographer: Paul Yeung / Bloomberg
The billionaires in Asia had only just started to control companies, but now the SPAC boom on Wall Street is draining.
Following a frenzy of listings by specialty acquisition companies – 326 have raised more than $ 101 billion this year – the entire pipeline is now in limbo over regulatory overhangs, including a number of deals by Asian investment firms and tycoons.
Gateway Strategic Acquisition Co., backed by buyout firm Gaw Capital Advisors Ltd., Artisan Acquisition Corp., backed by Adrian Cheng and Hony Capital Acquisition Corp. New World Development Co. are some of the Asian SPACs waiting in the wings to be incorporated in the US.
They all filed more than two weeks ago, which means they can launch the IPO but have yet to do so. But they are now waiting for market sentiment to improve, according to people familiar with the matter, who are not authorized to speak publicly and have asked not to be identified.
The US Securities and Exchange Commission put a damper on the SPAC party this week by leaving new guidelines indicating that warrants issued to early investors in the deals may not be considered equity instruments, but instead liabilities for accounting purposes. That threatens to disrupt the filing of applications for blank check companies until the problem is resolved.
It’s bad timing for entrepreneurs in Asia. In addition to those awaiting launch, more SPACs are being planned by the likes of Hong Kong’s wealthiest real estate magnate Li Ka-shing, New Frontier Group Ltd., backed by China-focused Nan Fung Group and private equity firm EmergeVest.
The SEC’s latest steps “undoubtedly mean that the clearing of SEC registration statements from Asian SPACs (and indeed SPACs elsewhere in the world) is likely to take longer as the issuer considers their impact and the likely related comments from SEC staff , ”said Thomas Vita, corporate finance partner at global law firm Norton Rose Fulbright.
Asian SPACs raised $ 3.1 billion this year, already surpassing the total of such deals in all of 2020. While it is still small, its rapidly growing volume underscores the growing appeal of SPACs to the region’s entrepreneurs.
Include Spree
Asian SPACs have already raised more this year than in all of 2020
Source: Bloomberg
A chill in the SPAC market may not be all bad news, given the bubbly quality it had delivered.
“The SPACs listed in the US before the SEC recently flashed the orange light do not necessarily have the first-mover advantage over aspiring Asian sponsors and promoters,” said Robson Lee, partner at Gibson Dunn. The proliferation of SPAC listings in the US does not guarantee successful mergers with viable target companies and appears to be a phenomenon of market madness, he added.
The US regulator had also warned against candidate placement that structuring as an SPAC is not an endpoint avoid disclosing important information to investors. To top it all off, SPACs no longer buzz like they once were, even this far underperforming traditional IPOs.
“It will be interesting to see what is happening in the US in the regulatory field. Asian regulators and stock exchanges will keep a close eye, ”said Johannes Juette, partner at law firm Clifford Chance.
– With the help of Vinicy Chan