Asian billionaires had only just started talking to blank check companies, but now the PSPC boom is deflating on Wall Street.
After a frenzy of listings by special purpose acquisition companies – 326 have raised more than $ 101 billion this year – the entire pipeline is now in limbo due to over-regulation, including some number of transactions by Asian investment firms and tycoons.
Gateway Strategic Acquisition Co., backed by buyout firm Gaw Capital Advisers Ltd., Artisan Acquisition Corp., backed by Adrian Cheng of New World Development Co. and Hony Capital Acquisition Corp. are some of the Asian PSPCs waiting backstage to be listed in the United States.
They all filed over two weeks ago, which means they can kick off the initial public offering, but haven’t done so yet. But they are now waiting for market sentiment to improve, according to people familiar with the matter, who are not authorized to speak publicly and have asked not to be identified.
This week, the U.S. Securities and Exchange Commission put the brakes on the SPAC party by exposing new indications that warrants, which are issued to early investors in the deals, may not be considered instruments of trading. equity and could instead be liabilities for accounting purposes. This threatens to disrupt blank check company deposits until the issue is resolved.
It’s a bad time for Asian entrepreneurs. In addition to those waiting to be launched, more PSPCs are being planned by Hong Kong’s richest real estate mogul Li Ka-shing, New Frontier Group Ltd., backed by Chinese group Nan. Fung and private equity firm EmergeVest.
The latest SEC action “undoubtedly means that clearing SEC registration statements from Asian PSPCs (and even PSPCs elsewhere in the world) will likely take longer, as the issuer will review their impact and respond to comments.” probably related to SEC staff, ”said Thomas Vita, corporate finance partner at global law firm Norton Rose Fulbright.
Asian PSPCs have raised $ 3.1 billion this year, already surpassing the total of these deals in 2020. While still low, the rapidly expanding volume underscores PSPC’s growing appeal to entrepreneurs in the region.
A cooling in the PSPC market may not be bad news, given the bubble quality it has acquired.
“PSPCs that were listed in the United States before the SEC flashed the orange light recently don’t necessarily have the first-mover advantage over aspiring Asian sponsors and promoters,” said Robson Lee, partner at Gibson Dunn. The increase in the number of PSPC ads in the United States does not guarantee the success of mergers with viable target companies and it appears to be a frenzy of the market, he added.
The US regulator had also warned candidates listing that the structuring in SPAC was not an end to avoid disclosing key information to investors. To top it off, PSPCs are no longer buzzing like they once were, going so far as to even outperform traditional IPOs.
“It will be interesting to see what happens in the United States on a regulatory level. Asian regulators and stock exchanges will follow closely, ”said Johannes Juette, partner at law firm Clifford Chance.
– With the help of Vinicy Chan