Hong Kong's First SPAC Listing Sees Aquila Shares Slip

Aquila Acquisition Corp shares slipped on Friday in the first special purpose acquisition company (SPAC) listing in Hong Kong as the city's bourse talked up what it calls "a new route to market".

The stock declined to HK$9.70 on its first day of trading, down 3% from the offer price of HK$10 each with only one live trade during the session. There were two further cross trades, Refinitiv data showed.

Hong Kong regulators gave the green light for SPAC listings in January and a further nine SPACs have since lodged filings to follow Aquila's debut, in which it raised just under $130 million.

But amid restrictions on retail investors and what market watchers called unfamiliarity with SPACs, Aquila shares had a muted day.

Professional investors are allowed to trade the shares but need to prove to their brokers they meet criteria put in place by regulators to restrict buying and selling SPAC shares.

Market participants said Hong Kong hoped to attract investors from mainland China to list SPACs, firms that raise cash to buy private firms, taking them public without a traditional initial public offering (IPO).

The deals come after Singapore became the first major market in Asia to allow SPACs to trade in the wake of a surge in 'blank cheque' firms listing in the United States. But a number of those U.S. firms are now trading under water, tempering the appetite of global investors for such deals.

Hong Kong Exchanges and Clearing Ltd (HKEX) welcomed the SPAC listing on the exchange's main board.

"It adds a new route to market for issuers (and) further diversifies our listing offering," HKEX Chief Executive Officer Nicolas Aguzin said in a statement.

Aquila said in filings it raised HK$1 billion ($128 million) by selling 100 million Class A shares at HK$10 each, in an offering that also included 50.03 million warrants. It said it intends to look for deals among companies in new economy sectors such as green energy.

A total of 99 investors bought into the Aquila SPAC, the filings show, with 40 of those considered professional institutional investors.

"It is new in the market and is only a shell," said Steven Leung, sales director at UOB Kay Hian, as the shares failed to trade.

"It may take a while for investors to get used to it and until sentiment for SPACs heat up again. And there are restrictions for retail investors, they cannot simply jump into it like other stocks."

Retail shareholders are restricted from buying the SPAC stock until the company makes an acquisition, which reduces the number of investors who can trade the shares.

Meanwhile Chinese investment banks regulated by the China Securities and Regulatory Commission (CSRC) have been barred from being SPAC promoters in Hong Kong, Reuters reported last week.

($1 = 7.8172 Hong Kong dollars)