Hong Kong’s first SPAC merger: Chinese steel website ZG Group set to combine with blank-cheque firm Aquila Acquisition
- Chinese steel trading website ZG Group, formerly known as Zhaogang.com, will combine with Hong Kong-listed Aquila Acquisition, exchange filing shows
- Aquila, Hong Kong’s first SPAC, raised about HK$1 billion in an initial public offering in March 2022
Chinese steel trading website ZG Group has agreed a deal to go public in Hong Kong via a merger with a special purpose acquisition company (SPAC) backed by China Merchants Bank’s overseas asset management arm.
The agreement comes with a private investment in public equity, or PIPE, with 10 investors including a subsidiary of commodities trading giant Trafigura Group, according to the filing. The proceeds from the PIPE will be HK$605 million.
A successful merger would see the first so-called de-SPAC by a Hong Kong-listed blank-cheque company, since the city’s stock exchange announced SPAC rules in 2021 in a bid to chase the US$245 billion US fad that flared and fizzled in less than two years.
Aquila, the Asian financial hub’s first SPAC, raised about HK$1 billion in an initial public offering in March 2022. The blank-cheque company planned to search for a target in Asia, with a focus on China, within “new economy” sectors, according to its prospectus. The SPAC’s shares debuted at HK$10 each and closed at HK$8.93 per share on Wednesday.
Aquila shareholders will vote on the merger at an extraordinary general meeting expected to be held in or around early December, the filing shows. Following the de-SPAC merger, the company will adopt a dual-class structure, giving class A shareholders one vote and class B shareholders 10 votes.
If all Aquila class A shareholders choose to keep their shares, Wang Dong and Wang Changhui, founder and co-founder of ZG Group respectively, would collectively have about 65.7 per cent of the voting rights. In that scenario, Aquila shareholders would have around 3.6 per cent of the voting power, the filing shows.
Founded in 2012, Zhaogang has more than 1,200 employees, according to its website. The company filed for a Hong Kong IPO in 2018 and had intended to use a dual-class share structure before dropping the plan.
China Merchants Bank International, HSBC Holdings and UBS Group are joint sponsors of the deemed new listing.
