Asia's SPAC Godfather expects bumper harvest in Hong Kong

[HONG KONG] Jason Wong, one of the first financiers to file for a SPAC listing in Hong Kong, said at least 40 blank-cheque companies may list in the city this year.

Dubbed by local media as "the Godfather of SPACs in Asia", he said he is seeing a ton of interest from Chinese dealmakers looking to start their own special-purpose acquisition companies in the financial hub. While Hong Kong's first SPAC was hurt by the recent market turmoil, there will be "huge" demand from promoters to launch more offerings if sentiment improves, he said.

"Originally I was expecting only 20 for the whole year, but now it's way more than that," he said in an interview last Friday (Mar 18). "I see a lot of promoters interested to jump into the market."

Wong filed in February for a potential Hong Kong initial public offering of Ace Eight Acquisition Corp, which he started with his nephew and frequent collaborator Eugene Wong. They will look for targets in the Chinese biotech and technology, media and telecom sectors, said a preliminary prospectus. The pair are trying their luck in the Hong Kong market after starting several US-listed SPACs in recent years, including one that is in the process of buying local startup DayDayCook.

There's an "enormous pool" of good companies for Hong Kong SPACs to acquire due to the long time it takes to sell shares in the mainland stock market, said Eugene Wong, chief executive officer of Ace Eight Acquisition. It has also become tougher for Chinese companies to list in New York, and Hong Kong regulators have clamped down on backdoor listings in the city.

"The interest coming from the target side gives promoters a lot more confidence to raise a SPAC," he said. "There's a huge backlog of quality companies in China that find it very difficult to list."

Hong Kong's rulebook for blank-cheque companies was announced in December. Aquila Acquisition Corp, backed by China Merchants Bank Co's overseas asset management arm, was the first to start trading since the new regulations came into effect. It fell 3.2 per cent in its debut last week after raising HK$1 billion (S$173.6 million). Aquila fell 0.8 per cent to HK$9.60 at the close in Hong Kong on Monday.

The timing is challenging for newcomers in Hong Kong, with pressures ranging from increasing interest rates to Russia's war in Ukraine and high volatility in Chinese stocks. Unlike other markets, Hong Kong regulators restrict SPAC trading to professional investors, potentially curbing liquidity. Nine other SPACs have filed to sell shares in the city, including one backed by former Goldman Sachs Group Inc rainmaker Fred Hu's Primavera Capital.

Li Ning, the star Chinese gymnast turned entrepreneur, has also applied to list a blank-cheque company. The city's rules are tougher, but Hong Kong offers a pool of wealthy Chinese investors that may be eager to snap up SPAC shares after largely sitting out the US blank-cheque boom, the younger Wong said.

His uncle said that the number of SPAC promoters who ultimately pursue Hong Kong listings this year will depend on how these next few deals perform.

Jason Wong said: "The market is big. You cannot escape that."

BLOOMBERG