Hong Kong listing reforms for SPACs, pre-revenue tech companies, foiled by high threshold, interest-rate cycle, experts say
- Hong Kong saw just five SPAC listings in 2022 and none in 2023, while pre-revenue tech companies are yet to list since the introduction of new rules
- The interest-rate cycle has turned, ending ‘free money chasing companies with crazy valuations’, says head of a capital markets practitioner body
Hong Kong Exchanges and Clearing’s (HKEX) two major listing reforms over the past two years to encourage fundraising deals by Special Purpose Acquisition Companies (SPACs) and specialist technology firms have yielded little success and industry participants are demanding further relaxations to help resuscitate IPO volumes in the city which have shrunk to a two-decade low.
Hong Kong stock exchange’s IPO ranking sank to 8th in 2023, with fundraising slumping to US$5.9 billion from 68 listings, the lowest since 2003, with blame being pinned on the tough listing requirements and high-interest rates, according to industry players.
Only five SPACs listed in Hong Kong in 2022 raising a combined US$639 million following the rule changes in January that year. That is a fraction of the US$13.4 billion raised by 86 SPACs in the US in the same year, according to Dealogic data.
HKEX’s performance in 2023 was even worse, with no SPACs listings taking place.
In Hong Kong, a SPAC needs to raise at least HK$1 billion (US$128 million) from professional investors and must announce an acquisition within 24 months, conditions that are more onerous than those in the US and Singapore.