Hong Kong faces an unfortunate event on its first SPAC event. There are three cases lingering the debut event; challenging market conditions, no retail participation, and new product unfamiliarity, said bankers working on IPOs for special purpose acquisition companies. Aquila Acquisition Corp has the lackluster debut.
There was no trading made on the exchange in the morning session. There was basically a bid offered in the morning session, but it was too unusual for an IPO. It was around 1.05m shares crossing at HK48.88 each and 735.000 shares at $8.38. One of the bankers witnessing the situation argued that the extreme volatile market led to disappointment. It is actually normal for investors to buy what they are familiar with instead of trying new one during this situation. So, current sell-offs dragged large caps valuations.
The other scenario affecting the debut was HK’s decision to bar retail investors from joining in blank-cheque IPO companies. They also bought the shares from the secondary market. Another banker affirmed that in order to get sufficient trading liquidity, retail investors should participate in the event. Hedge funds, SPAC IPO main buyers normally like retail investors.
On the other hand, Aquila only has 75% institutional professional investors occupying the float. It was dominated by them only from among 99 investors for their HK$1bn float. There are indeed participations from global hedge funds. But the deal went to Chinese Hedge funds, private bank accounts, and also investors, said IFR Asia.
Nicolas Aguzin, Hong Kong Exchanges and Clearing’s CEO said that the welcoming of Hong Kong SPAC listings will boost HKEx development. Additionally, it will give a new route for issuers and leverage the listing offering. It is vital to fuel the aspirations of the companies in the future.
