Aquila Acquisition Corp shares fell Friday as the first SPAC (special purpose acquisition company) listed in Hong Kong. The city’s bourse discussed what it called “a new route towards market”.
On its first trading day, the stock fell to HK$9.70. This is 3% lower than the offer price of HK$10 per share. There was only one trade during the session. Refinitiv data revealed that there were two additional cross trades.
Hong Kong regulators approved the SPAC listing in January. Nine additional SPACs have filed filings since then to follow Aquila’s debut in which it raised just below $130 million.
Aquila shares were muted today, despite restrictions on retail investors and market watchers calling unfamiliarity with SPACs “market watchers”
Professional investors can trade the shares, but they must prove to their brokers that they meet certain criteria. These include a restriction on buying or selling SPAC shares.
According to market participants, Hong Kong hoped that investors from mainland China would be attracted to the listing of SPACs. These are firms that raise money to purchase private companies and take them public without an IPO.
These deals were made after Singapore became Asia’s first major market to allow SPACs trading in response to a rise in US ‘blank check’ firms listing. However, many of these U.S. companies are now trading below water, which has tempered the global investor appetite for such deals.
Hong Kong Exchanges and Clearing Ltd. (HKEX), welcomed the SPAC listing to the exchange’s mainboard.
Nicolas Aguzin, HKEX Chief Executive Officer, stated in a statement that “it adds a route to market (and) further diversifies [our listing offering].”
Aquila stated in filings that it raised HK$1billion ($128m) through the sale of 100 million Class A shares at HK$10 each. The offering also included 50.03million warrants. It stated that it will seek deals with companies in the new economy sector of green energy.
According to the filings, 99 investors purchased shares in the Aquila SPAC, 40 of which were professional institutional investors.
Steven Leung, UOB Kay Hian’s sales director, stated that the share was “new in the market” and was only a shell, as the shares did not trade.
It may take time for investors to adjust to the change and for sentiment to heat up for SPACs. Retail investors cannot jump in like they would other stocks, and there are some restrictions.
SPAC stock is not available for purchase by retail shareholders until the company acquires it. This reduces the number of investors who are able to trade the shares.
Reuters reported last week that Chinese investment banks regulated under the China Securities and Regulatory Commissions (CSRC) were barred from being SPAC advocates in Hong Kong.