Analysis: New blank-check firms arm up for Asian unicorn hunt
22/12/2020 08:24
* More than a dozen SPACs hunt for mergers - sources
* Southeast Asian tech firms are in focus - sources
* SPACs entice companies with shorter IPO timelines
* Frenzy on Wall Street sees SPACs raising $70 bln this year
(Adds comment from NYSE, paragraph 10)
By Anshuman Daga and Kane Wu
SINGAPORE/HONG KONG, Dec 22 (Reuters) - A new fundraising
frenzy that swept Wall Street this year looks set to take hold
in Asia with more than a dozen special purpose acquisition
companies, or SPACs, on the hunt for fast-growing technology
firms that are ready to go public.
SPACs are exchange-listed shell companies that raise money
through initial public offerings (IPOs) and merge with firms by
enticing them with shorter listing timelines. Such structures
have raised a record total of more than $70 billion in the
United States this year, making them one of the hottest Wall
Street investment trends of 2020.
A large number of IPO-ready tech unicorns in Asia are likely
to rev up action, say bankers, lawyers and investors dealing
with capital raisings and mergers.
Hong Kong tycoon Richard Li, venture capitalist Peter Thiel,
Chinese buyout firm CITIC Capital, Singapore-based healthcare
entrepreneur David Sin and former hedge fund manager George
Raymond Zage are among a growing list of backers of SPACs.
"These days, not a single conversation goes by in Asia when
SPACs are not discussed. Southeast Asia is a focus market given
the number of high-growth tech-enabled companies," said Sarab
Bhutani, head of Southeast Asia investment banking at Nomura.
Many SPACs are holding talks with Southeast Asia's tech,
healthcare and fintech start-ups, bankers and lawyers familiar
with the matter said.
Ride-hailing and food delivery giants Grab and Gojek and
e-commerce firm Bukalapak have all either been approached or are
targets for SPACs, they said.
Grab and Gojek declined comment, while Bukalapak did not
respond to Reuters' query for comment. Traveloka, which operates
Southeast Asia's largest online travel app, told Reuters it
would go public soon and was evaluating a merger with a SPAC as
an option. urn:newsml:reuters.com:*:nL1N2J10NR
SoftBank Group Corp's 9984.T Vision Fund is also seeking
to raise $525 million through such a structure. urn:newsml:reuters.com:*:nL4N2J13VW
"The IPO market is much bigger in Asia and the pipeline is
very strong but we will continue to see SPACs coming out next
year," said Alex Ibrahim, head of international capital markets
at New York Stock Exchange.
SOUTHEAST ASIA IN FOCUS
Last month, a SPAC led by Zage raised $276 million, while Li
and Thiel's Bridgetown Holdings raised $595 million to acquire a
target in the technology, financial services or media sectors in
Southeast Asia, making it the biggest SPAC focused on the
region.
"Most growth companies in Southeast Asia are aware of the
SPAC exit route and are keen to explore merging with a SPAC,"
said Bhutani.
SPACs are known as "blank-check" companies, given their
often loose and speculative investment mandates.
Typically, they can acquire entities in as few as four to
five months and have deadlines of up to two years to seek
targets, failing which they return all money to the public
shareholders. urn:newsml:reuters.com:*:nL1N2GQ1JK
"Asian targets are mainly in Southeast Asia and in the tech
sector. Southeast Asian companies have less IPO experience and
therefore are more open to the SPAC option," Peter Kuo, CEO of
SPAC PTK Acquisition Corp PTK.A and partner at buyout firm
Canyon Bridge, told Reuters.
Kuo said that in his personal capacity he led PTK's $115
million listing eyeing the U.S. tech sector, especially electric
vehicle makers.
Other Asia-focussed SPACs include that of Chinese firm CITIC
Capital which raised $240 million, another healthcare SPAC by
Sin and a Southeast Asia-targeted one backed by investment firm
Argyle Street Management.
Bankers in Asia expect a wave of mergers in coming years
when the new SPACs merge or acquire their targets, through a
process known as "de-SPACing".
"There are 200 unicorns in Asia. De-SPACing is going to
start with those high-growth companies," Christopher Laskowski,
head of Citi's Hong Kong corporate and investment banking team,
said at a Mergermarket webinar this month.
For now, a record number of companies in Asia have seen
their valuations double after IPOs this year as retail investors
make the most of unprecedented market liquidity. urn:newsml:reuters.com:*:nL4N2IV26P
"Since there are a lot of companies in Asia waiting to go
public, they may look to SPACs as an alternative to IPOs. I
would imagine more to happen," said Jonathan Zhu, Hong
Kong-based managing director at Bain Capital Private Equity.
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SPAC activity picks up in Europe while U.S. sees a boom: https://tmsnrt.rs/2I9Nb6u
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(Reporting by Anshuman Daga and Kane Wu; Additional reporting
by Fanny Potkin; Editing by Sumeet Chatterjee, Sam Holmes and
Alexander Smith)
((anshuman.daga@tr.com))