Thousands of miles from Wall Street, the boom in blank check companies is firming up in a region where major stock exchanges do not allow companies to raise money for unspecified uses.
In mainland China, Hong Kong and Singapore, tycoon-controlled investment companies and money managers collectively raised billions of dollars on the New York Stock Exchange and Nasdaq Stock Market last year through acquisition vehicles showing how comprehensive the SPAC boom was.
The vehicles are publicly traded front companies with cash reserves available to invest in – and merge with – private companies. They were praised by investment bankers as an easier way to go public to startups. If a SPAC does not find a target for the merger within a period, usually two years, investors can take their money back.
On February 18, eight company-sponsored SPACs in Asia raised a total of $ 2.3 billion this year, according to data from Dealogic. The amount is small compared to what was raised by American companies, but it has already exceeded the total collected from SPACs in the region for the whole of 2020. Bankers say that more issues are likely, including from private equity groups.
“This is an attractive pocket of capital that all major private equity and venture companies in Asia will be considering,” said Udhay Furtado, co-director of Asian equity capital markets at Citigroup Inc.