Real estate tycoon Adrian Cheng and gaming mogul Lawrence Ho are seeking to list their special purpose acquisition companies (SPACs) on the Hong Kong Stock Exchange, jumping on the initial public offering bandwagon despite the increased market volatility caused by Russia’s invasion of Ukraine.
Encouraged by the SPAC boom in the U.S., the Singapore and Hong Kong bourses have started listing SPACs in recent months. There are more than 10 aspirants in Hong Kong since regulators allowed such listings from January this year, the latest of which are the firms backed by Cheng and Ho.
“SPACs in the U.S. have reached a crescendo in the second quarter of 2021,” Nirgunan Tiruchelvam, Singapore-based head of consumer sector equity research at Tellimer, told Forbes Asia. “Since then, valuations have fallen. Valuations have completely changed.”
In 2021, about 679 blank cheque companies raised a combined $172 billion, an all-time high, according to New York-based law firm White & Case. Among the biggest SPAC deals last year was the listing of Grab, which merged with Altimeter Growth Corp. in the largest-ever IPO of a Southeast Asian company on Nasdaq. But with Grab shares slumping more than 60% since its trading debut in November as investors weighed the ride-hailing and food delivery giant’s deepening losses, new SPACs and other tech IPOs in the pipeline are likely to tread with caution.
Seen as a faster way to raise capital over traditional IPOs, SPACs became popular in the U.S. during the pandemic, providing investors a shell company to acquire promising startups and other growth assets through mergers or backdoor listings. It provides a runway for a listing that’s not possible through a traditional IPO.
In his latest SPAC investment, Cheng, CEO of Hong Kong real estate giant New World Development, is backing the listing of A SPAC (HK) Acquisition Corp. through Arta TechFin, a Hong Kong-listed financial services company he controls, according to a prospectus filed on Wednesday. In September, Cheng’s Artisan Acquisition Corp. agreed to merge with Prenetics in a deal that values the biotech firm at $1.25 billion. The transaction has yet to be completed.
Separately, Ho, the son of late gaming tycoon Stanley Ho, is also preparing to list his investment vehicle Black Spade Asia Acquisition Corp. in Hong Kong. Backed by Ho and Bank of China’s BOCHK Asset Management, Black Spade Asia is looking for opportunities in the entertainment, lifestyle and healthcare industries, according to its IPO prospectus.
With a net worth of $1.3 billion, Ho is the chairman and CEO of Melco Resorts & Entertainment, whose portfolio includes resort casinos in Macau and Manila. Melco Resorts is also building City of Dreams Mediterranean in Cyprus. Ho’s private investment vehicle Black Spade Capital raised $169 million from a SPAC listing in New York in July 2021, according to the South China Morning Post.
The proposed IPOs come on the heels of the SPAC listing by PropertyGuru, a Singapore-based property website backed by billionaires Richard Li and Peter Thiel, in New York last week. The shares rose 1.6% to close at $8.46 in its first trading day on Friday, a decent performance amid the recent selloff in tech stocks, rising U.S. interest rates and market turbulence arising from the war in Ukraine.
The market volatility provides a note of caution for SPAC sponsors, “Maybe the Asian promoters would be wiser in allocating their capital,” Tiruchelvam said. “The deals that they’re doing maybe priced at a better price.”
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