The wealthiest families and people in Asia are jumping on the SPAC vehicle, investing in the white check companies that have taken global markets by storm.
Family offices include those backed by casino mogul Lawrence Ho gathering in special purpose construction companies to generate better returns in the environment at a low interest rate.
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“We are seeing a growing number of people with net worth and family offices in Asia increase their asset allocation to membership for SPAC shares,” said Dennis Tam, chief executive of Ho Black Spade family office Capital, which raises the topic of portfolio “The SPAC market is now very strong, with a very low cost of assets which means a low opportunity cost to invest.”
Near-zero interest rates have encouraged Asia’s wealth to seek alternative investment methods, with a particular focus on SPACs backed by large private access funds such as KKR & Co. and billionaires including Adrian Cheng, Li Ka-shing and Richard Li. Hong Kong and Singapore will see the crack widen as cities scrutinize allowing SPAC listings.
“This year we are going to see Asian investors, especially those on the private wealth side, get more out of SPACs,” said healthcare entrepreneur David Sin, who has backed to any such company.
That sees a spike in investment interest from wealthy people and private banking money. Some SPACs have recently seen more than 90% of funding come from private wealth rather than institutional investors, he said.
SPACs raise money from investors and then look to acquire another business, usually a private business, within two years. If they cannot identify targets, investors can choose to get their investment back at the original public offer price using the right repurchase.
“In this sense it can be considered a safer investment than bonds due to remote underlying risk,” Tam said. “Furthermore, if you invest in the more prestigious SPACs established by reputable tycoons and large PE funds, investors can produce moderately high returns. “
Asian financial institutions are not the only ones looking to capture more of the US-controlled SPAC market. The UK can make it easier to make regulations more attractive to SPACs in London, a report this week said.
Some doubt that success will be sustained.
“As the number of SPAC IPOs grows, too many sponsors may have too little confidence in the skills of achieving less valuable targets, chasing too few deserving businesses, “said Edward Au, a Hong Kong – based southern region managing partner at Deloitte.
So far this year at least eight blank check companies backed by Asian sponsors including Primavera Capital and Hopu Investment Management have gone public in the US, raising at least $ 2.42 billion , data compiled by Bloomberg. That’s a huge acceleration from 2020, when 11 Asian SPACs raised $ 2.26 billion all year.
Hong Kong-based Raffles Family Office, which has been managing $ 1.8 billion of assets since August, has given its clients access to SPACs including Bridgetown 2 Holdings Ltd. by Richard Li.
“We have seen a growing interest in the areas of cleantech, biotech and healthcare,” said Raffles CEO Chiman Kwan. “Some of the crucial factors in choosing an SPAC supporter to work with are the creditworthiness, commercial viability and the history of selecting appropriate construction targets and closing contracts. “