Hong Kong Markets See First SPAC Deal

The Hong Kong market saw its first special purpose acquisition company (SPAC) deal close Friday (March 18), with several more on their way.

As The Wall Street Journal reported, Aquila Acquisition Corp.’s $128 million fundraise marks Hong Kong’s attempt to establish itself as a haven for blank-check companies focused on China and Asia. The market debut came amid a volatile time for stocks in China, thanks to worries about delisting in the U.S., ongoing COVID-19 lockdowns and the Russian invasion of Ukraine.

Read more: SEC’s Gensler Sees Need for Investor Protections in SPACs

SPACs deals happen when companies raise money before seeking out a private company to merge with. They have been popular in recent years as a faster alternative to initial public offerings, although they’ve come under regulatory scrutiny in the U.S.

The deals are seen as durable because investors can vote on proposed mergers and choose to demand their cash back.

“It’s probably one of the few things that you could price in a market backdrop like we have this week,” said Eliot Fisk, a consultant and the former head JPMorgan Chase’s Asia equity capital markets syndicate, referring to Hong Kong SPACs.

The Journal report said nine other companies have filed to list in Hong Kong as SPACs.

Aquila, named after the constellation that is represented by an eagle, said it is looking to merge with companies in sectors such as green energy, life sciences and advanced technology in Asia, ideally in China.

See also: Traditional IPOs Announcements Gain Ground in 2022, While SPAC Deals Sputter

As PYMNTS reported earlier this year, there’s been a hiccup recently in the SPAC space, with a number of blank-check firms failing to complete mergers after going public and seeking acquisition targets.

At least six of those mergers were been canceled this year, according to SPAC Research, while another 22 have been called off since the middle of 2021. That’s a pace rivaling the 26 deals that failed to close in all of the previous five years put together.