Blank-check companies – popularly known as SPACs – have taken American markets by storm, but analysts are split on whether they will make an appearance on Hong Kong’s stock exchange.

Special-purpose acquisition companies, or SPACs, are shell companies that seek to go public and to buy a private company afterwards. The move allows the acquired company to become public via a merger, without needing to go through an IPO of its own.

Hong Kong’s stock exchange, HKEX, told Apple Daily in a statement that it would “study improvements and reforms to the different listing options from time to time,” so as to ensure the competitiveness and quality of Hong Kong’s stock market.

Au King-lun, executive director of the Financial Services Development Council, recently wrote on his blog that the issue of SPACs deserves serious study.

Last year, 248 SPACs went public around the world and raised a total of US$83.3 billion, according to SPAC Analytics. The trend has accelerated in 2021, with 160 SPAC listings and US$47.6 billion raised as of mid-February.

“In traditional IPOs, companies are looking for capital, but SPACs represent capital looking for high-quality companies,” said Nick Wong, managing partner of the alternative investment platform Altive.

Wong said SPACs provide a faster, cheaper way for private companies to get listed. Blank-check companies have also become a desirable investment for some institutional investors, he added.

However, the HKEX has been cracking down on reverse takeovers and urging companies to conduct their IPOs through standard channels, said Mike Leung, investment manager at Wocom Securities.

The idea of SPACs might not be consistent with the HKEX’s intentions, Leung said, adding that there was no urgency for SPACs as the Hong Kong stock market has been preoccupied with mega-cap China concept stocks.

“The Hong Kong market is not as flexible as that of the U.S. Introducing SPACs would require changing the Listing Rules, which will take years of consultation and implementation,” Leung said. “By that point the SPAC craze might be over.”

Click here for Chinese version

---------------------------------

Apple Daily’s all-new English Edition is now available on the mobile app: bit.ly/2yMMfQE

To download the latest version,

iOS: bit.ly/AD_iOS

Android: bit.ly/AD_android

Or search Appledaily in App Store or Google Play