Blank-cheque firm of former HKMA chief Norman Chan completes US$127 million IPO as Hong Kong’s third SPAC listing

The special purpose acquisition company is co-owned by Chan and two family members of the city’s former chief executive Donald Tsang Yam-kuen
The SPAC will focus on acquiring companies in financial services and tech

IPO

Georgina Lee

Published: 4:45pm, 9 Aug 2022

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HK Acquisition Corp, a blank-cheque company backed by the former head of Hong Kong’s de facto central bank, has its book fully covered for its HK$1 billion (US$127 million) initial public offering (IPO) on Monday, according to people close to the transaction.

The special purpose acquisition company (SPAC) formed by Norman Chan Tak-lam, the former chief executive of the Hong Kong Monetary Authority (HKMA), along with two family members of the city’s former chief executive Donald Tsang Yam-kuen, will issue 100 million shares at HK$10 each. Every two shares will entitle the holder to one warrant, exercisable at HK$11.50.

HK Acquisition Corp is the city’s third SPAC to complete an IPO under a relatively new listing regime that started in January. Listing on the Hong Kong main board is scheduled for August 15, said the sources, who are not authorised to speak publicly about the deal.

Chan owns 51 per cent of the company. The other 49 per cent is co-owned by Katherine Tsang King-suen, former chairwoman of Standard Chartered Greater China and the younger sister of Donald Tsang, and investment firm Max Giant, which Katherine Tsang and her nephew Thomas Tsang Hing-shun co-founded. Thomas Tsang, the son of the former Hong Kong leader, is also Max Giant’s chief investment officer.

Katherine Tsang King-suen, former Standard Chartered executive and sister of former chief executive Donald Tsang Yam-kuen, pictured in May 2019. Photo: SCMP / Winson Wong

SPACs are shell companies that raise funds through a share sale to investors, then use the proceeds to buy assets within a limited period of time. The target or targets the SPAC is planning to buy remain unknown until it makes a formal announcement, which in Hong Kong should fall within 24 months of the SPAC’s listing date.

Failing this, the SPAC must liquidate and return the funds to investors. Investors are therefore relying heavily on the experience and track record of the promoters and their advisers to find attractive acquisition targets and deliver them a return.

HK Acquisition Corp intends to focus on companies in the financial services and technology sectors that have operations in China, Hong Kong, Macau or Taiwan, it said in its draft listing prospectus.

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“Our promoters, Dr. Chan and Ms. Tsang, have played very substantial roles in the development and innovation of Hong Kong’s financial services industry,” the company said in the heavily redacted draft prospectus.

The company’s directors and senior management are “home-grown icons valuing integrity and ethics as their primary priorities”, who are dedicated to launching a SPAC to support this novel listing alternative in the city’s capital market, the company said.

As the head of the HKMA for a decade until he retired in September 2019, Chan played an instrumental role in safeguarding the city’s financial stability and helped advance the city’s role as an international offshore hub for the yuan.

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During his career at the monetary authority, Chan helped his predecessor Joseph Yam direct the unprecedented stock market operation to drive away speculators who tried to attack the currency peg during the 1998 Asian financial crisis. This took place under the administration of then chief executive Tung Chee-hwa, under whom Donald Tsang was the financial secretary.

Hong Kong allows only professional investors to buy and deal in shares issued by a SPAC, and listings need to raise at least HK$1 billion to qualify for the main board – the highest requirement for SPACs among all exchanges worldwide.

Haitong International, the sole sponsor for the deal, was not immediately available for comment.

Hong Kong first two SPACs are Vision Deal and Aquila Acquisition.

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