Seven firms have acted for Hong Kong’s first de-SPAC transaction involving a proposed merger between specialised shell company Aquila Acquisition and Chinese steel trading website ZG Group.
Hong Kong’s first special purpose acquisition company (SPAC), Aquila, has signed a merger agreement with ZG Group. If successful, this will be the first de-SPAC transaction in the city after the introduction of the SPAC regime in Hong Kong in December 2021.
A de-SPAC deal is a merger allowing a SPAC to put its money into a private operating company that will then trade in the public market. Once the merger is complete, the company becomes the surviving entity and the SPAC dissolves.
Freshfields assisted as Hong Kong and US counsel to Aquila, while Maples acted as Cayman Islands counsel.
Allen & Overy advised the joint sponsors – CMB International, HSBC and UBS – on Hong Kong and US law, while JunHe counselled on PRC law.
Paul Hastings acted as Hong Kong counsel to the promoters, which includes Aquila’s executive director Jiang Rongfeng and Le Di, non-executive director Wu Qian and CMB International Asset Management.
The merger agreement between Aquila and ZG Group is subject to approval at an extraordinary general meeting scheduled for the end of the year. A two-thirds vote from shareholders is required for the merger to proceed.
ZG Group is valued at HKD10 billion (USD1.28 billion) and has gained HKD605.3 million from 10 private investment in public equity (PIPE) investors with Aquila. Investors in a PIPE offering commit to purchase a certain number of restricted shares from a company at a specified price. The company agrees, in turn, to file a resale registration statement so investors can resell their shares to the public.
Since the implementation of the SPAC regime in Hong Kong, 14 SPACs submitted prospectuses on the HKEX. However, only five received listing approval and none have completed a company acquisition to date.