Hong Kong approves SPAC listings, clearing the way for blank cheque companies to raise capital through initial public offerings

Hong Kong and mainland Chinese start-ups will soon be allowed to use a new method of raising funds from the local stock market, thanks to a move that is likely to strengthen the city's standing as an international financial centre. Hong Kong's stock market operator will allow blank cheque firms known as special purpose acquisition companies (SPACs) to list their shares from January, according to a statement from Hong Kong Exchanges and Clearing Limited (HKEX) on Friday. The move will align the city's stock market with global bourses from New York to Singapore in opening up this increasingly popular fundraising avenue for start-ups. Since early 2020, SPACs have been the hottest fundraising trend for start-ups, raising US$81 billion last year and US$139 billion as of October 28 this year, according to Refinitiv's data. SPACs enable companies that would otherwise not qualify for a stock market listing to raise funds. Many firms from Hong Kong and China have taken advantage in the last couple of years. Hong Kong fast-tracked its approval for SPAC listings after the government signalled its support. Financial Secretary Paul Chan Mo-po in March urged the HKEX to look into SPAC listings after several local tycoons listed their blank-cheque companies in the US. "Our new SPAC listing regime reflects our commitment to continue to build Hong Kong's reputation as the region's premier capital-raising market, reinforcing its global role as a world-leading international financial centre," said the HKEX's chief executive Nicholas Aguzin. "HKEX is fully focused on making Hong Kong's markets internationally attractive, competitive and diversified." SPACs must raise at least HK$1 billion (US$128 million) to qualify for a listing in the city, the operator of the world's third-largest capital market. Applications will start on January 1. SPACs will be given two years to announce a transaction, which must be completed within 36 months of their formation, HKEX said.

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