SPACs face a new test: a wave of deals focused on Asia

Thousands of miles from Wall Street, the boom in blank check companies is taking hold 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 the Nasdaq Stock Exchange over the past year through Special purpose procurement vehicles, demonstrating the scope SPAC’s boom has been.

Vehicles are publicly traded shell companies with cash funds ready to invest 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 meet a merger target before a deadline, usually two years, investors could get their money back.

As of February 18, eight company-sponsored SPACs in Asia raised a total of $ 2.3 billion this year, according to data from Dealogic. The sum is small relative to what US companies have raised, but it has already exceeded the total raised from SPACs in the region for all of 2020. Bankers say more issues are likely, even from private equity groups.

“This is a compelling pocket of capital that all the large private equity and venture capital firms in Asia will be considering,” said Udhay Furtado, co-head of Asia Capital Markets at Citigroup Inc.


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