The SPAC frenzy may be heading to Asia — experts say clearer rules are

The new fundraising frenzy that has swept Wall Street this year looks set to spill over to Asia, with over a dozen Specialty Tech Companies (SPACs) poised to go public..

SPACs are dummy listed companies that raise money through IPOs and team up with other firms to attract them with shorter listing periods. Such structures grossed a record over $ 70 billion in 2020, making them one of Wall Street’s hottest investment trends this year..

A large number of IPO-ready tech market players in Asia are likely to step up, according to bankers, lawyers and investors involved in raising capital and mergers..

Hong Kong tycoon Richard Lee, venture capitalist Peter Thiel, Chinese firm CITIC Capital and Singaporean healthcare entrepreneur David Sin are on an extensive list of SPACs sponsors.

«Now in Asia, not a day goes by without talking about SPAC. Southeast Asia is a focal market considering the number of high-growth tech companies», – noted the banker Sarab Bhutani.

Many SPAC projects are in negotiations with technology, medical and fintech startups in Southeast Asia.

Food and grocery delivery giants Grab and Gojek and e-commerce company Bukalapak have either been approached or targeted by SPACs, experts say..

Traveloka, which operates the largest online travel app in the region, told Reuters it will go public soon and is considering a merger with SPAC as an option..

SoftBank Group is also seeking to raise $ 525 million through such a structure..

IPO wave through SPAC mechanisms could overwhelm the Asian market

«Most growing companies in Southeast Asia are aware of the SPAC exit technology and are eager to explore the possibility of merging with them.», – said Bhutani.

As a rule, shell companies can acquire businesses in as little as four to five months and have a time frame of up to two years to reach their targets, otherwise they return all funds to public shareholders..

«Southeast Asian companies have less IPO experience and are therefore more open to the SPAC option», – said to Reuters Peter Kuo, CEO of SPAC PTK Acquisition Corp and partner of Canyon Bridge.

He added that, in addition to Asia, he monitors the US tech sector, especially the electric vehicle manufacturers..

Bankers in Asia expect a wave of mergers in the coming years as new SPAC projects merge or make acquisitions.

For now, a record number of companies in the region have doubled their valuations since this year’s IPO as retail investors make the most of unprecedented market liquidity.

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