Can Hong Kong keep its SPAC jealous in Bay?


Even if they find a great sponsor who in turn hits a hot target, they may still lose because 20% of the free stakes are given to SPAC promoters, guarantees that Buybacks are kept free of charge and IPO underwriting fees. All this dilution means someone investing $10 in SPAC and holding for merger is trying to make a profit with only $6.67 in cash. Is this poor man’s private equity, or the poor cousin of private equity? Unsurprisingly, “SPAC shares tend to drop by a third or more in value within a year of the merger,” according to a Stanford Law School working paper whose authors studied 47 mergers – de-SPAC in industry jargon – from January 2019 to June 2020. Can Hong Kong keep its SPAC jealous in Bay?


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