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Laxman Pai, Opalesque Asia: About one-fifth of special purpose acquisition company (SPAC) initial public offerings (IPOs) is not in favor of completing the de-SPAC transaction with any entity that had principal business operations in China (including Hong Kong and Macau), said a study.
According to GlobalData, China's tougher offshore IPO listing rules and the US SPACs decision to exclude Chinese entities from de-SPAC transactions could leave capital-hungry startups dry. Smaller startups may consider getting merged with blank check firms to accelerate their expansion as SPAC is a quicker and more economical way for a company to go public.
The data and analytics company revealed in a report that concerns about Chinese entities failing to secure local governments' permission to follow the guidelines of the Holding Foreign Companies Accountable Act (HFCAA) could be one of the factors influencing the initial business combination decision of SPACs.
Besides, Beijing's crackdown on big technology firms in recent times is also a factor for the blank check companies' decision to remove Chinese firms from their areas of interest, it said.
HFCAA, brought into effect by the Securities and Exchange Commission (SEC) in December 2020, mandates all companies listed on US exchanges to provide evidence of their auditing inspections and furnish documents to prove that the registrants are not owned or controlled by a governmental entity in a foreign jurisdiction.
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