Asia’s ultra-rich are piling up investments in blank check companies

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Asia’s wealthiest families and individuals are jumping on the SPAC bandwagon, investing in the blank check companies that have taken global markets by storm.

Family offices, including those backed by casino mogul Lawrence Ho, are piling up special purpose acquisition companies to generate better returns in the environment of low interest rates.

“We are seeing a growing number of high net worth individuals and family offices in Asia increasing their allocation of funds to subscribe for SPAC shares,” said Dennis Tam, CEO of Ho’s family office. Black Spade Capital, which is building a thematic portfolio on vehicles. “The SPAC market is very robust now, thanks to a very low cost of the fund, which implies a low opportunity cost to invest.”

Interest rates near zero have prompted the wealthy in Asia to seek alternative investment channels, paying particular attention to SPACs sponsored by large private equity funds like KKR & Co. and billionaires like Adrian Cheng, Li Ka-shing and Richard Li. Hong Kong and Singapore could see the madness widening as cities explore allowing SPAC listings.

“This year we will see Asian investors, especially those on the private wealth side, increasingly participating in SPACs,” said healthcare entrepreneur David Sin, who has sponsored one such venture.

Sin is experiencing an increase in investment interest from the rich and money from private banks. Some recent SPACs have seen more than 90% of funds come from private wealth rather than institutional investors, he said.

Blank check please

North America makes up the majority of the SPAC listing market

Source: Bloomberg

SPACs raise money from investors and then look to acquire another business, usually a private one, within two years. If they do not identify the objectives, investors can choose to recoup their investment at the initial public offering price by exercising their right of redemption.

“In this sense, it can be seen as a safer investment than bonds due to a very remote default risk,” Tam said. “Also, if you invest in the most reputable SPACs founded by reputable moguls and large private equity funds, investors can get quite a high return.”


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