Thousands of miles from Wall Street, the boom of empty check companies is taking place in a region where major stock markets do not allow companies to raise money for unspecified uses.
In mainland China, Hong Kong and Singapore, investment firms controlled by tycoons and money managers have collectively raised billions of dollars on the New York Stock Exchange and the Nasdaq stock market over the past year through special-purpose procurement vehicles, showing how big the SPAC Boom was.
Vehicles are listed companies with cash ready to invest and merge with private companies. These have been supported by investment bankers as an easier way for startups to go public. If a SPAC fails to find a merger target by the deadline, usually two years, investors could take their money back.
As of Feb. 18, eight Asian-sponsored SPACs have raised a total of $ 2.3 billion this year, according to Dealogic. The amount is small compared to what was collected by US companies, but has already exceeded the total collected from SPACs in the region for the whole of 2020. Bankers say there are several issues, including from private equity groups.
“This is a compelling capital pocket that will be considered by all major private equity and venture capital firms in Asia,” Udhay Furtado, co-chief of Asian capital markets, told Citigroup Inc.