Rosewood hotels, casino magnate join Hong Kong SPAC mania 

Ultra-low or even negative interest rates fuel new craze as loose monetary policy means lower cost of funds and greater incentive for investors to look for new investments

Rosewood hotels, casino magnate join Hong Kong SPAC mania
Lawrence Ho Yau Lung, chief executive of Melco Entertainment, stands inside the casino in the City of Dreams complex in Macau. The gambling magnate is establishing a SPAC-themed portfolio at his family company. File photo by Reuters.

(ATF) Hong Kong's luxury Rosewood Hotel Group is the latest company to join the Asia craze for Special Purpose Acquisition Company (SPAC) listings.

Reuters reported that the unit of property developer New World Development (NWD) has enlisted Credit Suisse and JPMorgan to lead the US SPAC listing.

In a typical SPAC transaction, a company merges with a so-called blank-cheque company that raises money through initial public offerings (IPOs). The attraction is quicker funding and shorter listing timelines.

The Rosewood SPAC will issue shares at US$10 each, with the listing aiming to raise about $400 million.

The hotel group, run by Sonia Cheng – granddaughter of family-run NWD founder Yu-tung Cheng – manages one of Hong Kong's most prominent hotels.

Adrian Cheng, Sonia's brother and chief executive of NWD, is separately in talks with banks about a SPAC listing, the people said. Bloomberg reported on Monday he's aiming to raise $400 million.

Rosewood's deal would join a growing list of such transactions involving Asian issuers. Richard Li, son of property tycoon Li Ka-shing, set up two SPACs last year with US venture capitalist Peter Thiel.

BUOYANT MARKET

One of the latest SPAC vehicles in Asia is Black Spade Capital, the family office of casino magnate Lawrence Ho Yau Lung.

Ho is chairman and chief executive of Nasdaq-listed, Hong Kong-based Melco Entertainment, which owns and operates the City of Dreams and Studio City entertainment complexes in Macau.

"We aim to be one of the first Asian family offices to build a SPAC-themed portfolio," said Dennis Tam, president and chief executive of Black Spade Capital.

Tam said the SPAC craze has been fuelled by ultra-low interest rates. "Loose monetary policy means lower cost of funds and greater incentive for investors to look for new investments," he said.

Funds raised via SPAC IPOs reached $60 billion by February 28, according to Dealogic data.

"The fact that both the number and size of SPAC deals in the first two months of 2021 represent some 56% of the full-year performance in 2020 reflects just how buoyant the SPAC market is," Tam added.

"The whole SPAC trend has to do to a certain extent with the abundance of capital in the market seeking return."

With reporting by Reuters

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Hong Kong Markets SPAC craze SPAC listings Rosewood Hotels Lawrence Ho Melco Entertainment Macao casinos Sonia Cheng Adrian Cheng Black Spade Capital Dennis Tam Peter Thiel