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HONG KONG/SINGAPORE (Reuters) - Asian bourses from Tokyo to Singapore are considering rule changes to allow listing of SPACs, but some industry players say the region may not attract the kind of frenzy, or the massive billions of dollars, seen in the U.S. for such blank cheque firms.
FILE PHOTO: A panel displays a list of top active securities outside the Hong Kong Exchanges in Hong Kong, China February 28, 2018. REUTERS/Bobby Yip
The trend to list through Special Purpose Acquisition Companies (SPACs) has seen such floats raise $96 billion in the United States this year after a bumper 2020.
SPAC deals propel Q1 M&A activity to strongest start since 1980
Global M&A hits $1.3bn
M&A activity hits record in Q1
Anna Fedorova
Global M&A activity has seen the strongest opening since 1980, with worldwide deals totalling $1.3trn year-to-date and 27% of deals between $1bn-$5bn coming from SPACs.
The first quarter saw global M&A activity increase by 93%, according to Refinitiv, the strongest percentage gain in 33 years.
This was fuelled by the recently SPAC deal frenzy, with the value and number of deals reaching an all-time quarterly record.
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Some 103 SPAC combinations have been announced so far in 2021, worth a combined $228.5bn, with the rise in activity leading the US Securities and Exchange Commission to start an enquiry into the risks involved.
SEC Warns SPAC Targets the Road May be Difficult By
April 1, 2021
The SEC issued two pieces of guidance on special purpose acquisition companies, or SPACs. One piece, styled as a statement by Paul Munter, Acting Chief Accountant, speaks to financial reporting and auditing considerations of companies merging with SPACs. The other statement, issued by the Division of Corporation Finance, is labeled “Staff Statement on Select Issues Pertaining to Special Purpose Acquisition Companies.”
As to financial reporting and auditing matters the SEC notes, among other things:
Companies acquired by SPACs need to be prepared to transition from being a private company to a public company very quickly. Do not underestimate the challenges.
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