Bankers say all aboard for great Asia SPAC merger lift-off By Reuters

<iframe src=”//rcm-na.amazon-adsystem.com/e/cm?o=1&p=22&l=ur1&category=homegarden&banner=02NMTC702K4D0VHE1SR2&f=ifr&linkID=17e0b4ac3a719000706e772761d8ae0e&t=forexz-20&tracking_id=forexz-20″ width=”250″ height=”250″ scrolling=”no” border=”0″ marginwidth=”0″ style=”border:none;” frameborder=”0″></iframe>

© Reuters.

By Kane Wu

HONG KONG (Reuters) – Asia’s bankers say they expect the hottest trend in global deal-making, IPOs for special-purpose acquisition vehicles (SPAC), to rocket in the region this year from small beginnings, fuelled by well-resourced investors including private equity firms.

Globally, SPACs raised $92 billion from IPOs in first-quarter 2021, according to Refinitiv data, already surpassing al of 2020. SPAC mergers – when the blank check firm uses IPO funds to merge with a target – amounted to $210 billion.

But Asia’s representation in the global pie has been small so far – about 11 out of 2021’s 304 SPAC IPOs, and just $4.7 billion in SPAC mergers. Given the region’s large pool of new-economy companies, bankers are now plugging it as a hot spot for merger targets.

Raghav Maliah, co-head of M&A for Asia ex-Japan at Goldman Sachs (NYSE:), said the significant increase of Asia-focused SPAC involvement has been the most notable feature in the region’s M&A this year. First-quarter Asia M&A hit a three-year high of $279.5 billion, up 37% year-on-year, Refinitiv data showed, with private equity-backed deals scoring a record $40.6 billion.

“These blank check companies (SPACs) have become a new dynamic force and potential merger partner for some of Asia’s most innovative companies,” Maliah said.

For example, India’s largest renewable energy firm ReNew Power, in which Goldman invested, in February agreed to go public through a merger with a SPAC.

Meanwhile Chinese ride hailing giant Didi Chuxing and its Indonesian counterpart Grab have held discussions about the SPAC merger option to go public, Reuters has reported.

Samson Lo, head of Asia M&A at UBS, said SPAC-related activities will last for the large part of the year. Still, he cautioned, a mismatch could yet develop in the supply of SPAC merger candidates and demand from the abundance of SPACs that just “keep coming”.

Banks not only generate fees from the SPAC merger transactions, but also from potential ‘PIPE’ (private investment in public entity) deals – when a SPAC raises additional capital to complete a targeted merger.

On the funding side, private equity deployable capital focusing on Asia stood at $376.4 billion in March – the highest ever, according to data provider Preqin.

“There are lots of buyers, including SPAC, private equity and strategic (investors), which makes it an attractive time to sell assets,” said Mayooran Elalingam, Deutsche Bank (DE:)’s head of investment banking coverage & advisory in Asia Pacific. 

“We are seeing positive momentum in the market.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Be the first to comment

Leave a Reply

Your email address will not be published.


*