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Business deals

Hong Kong tycoon's SPAC raises $300m for China deals

Adrian Cheng-led vehicle first to list in US from Asia since SEC warning

Adrian Cheng's SPAC was able to complete its share sale within two hours. (Photo by Paul Yeung)

HONG KONG -- Hong Kong billionaire Adrian Cheng has raised $300 million through a Nasdaq Stock Market IPO for a special-purpose acquisition company focused on acquisitions of health care, consumer and technology businesses with potential for the greater China market.

The initial public offering for Artisan Acquisition marks the first SPAC created by an Asian company in the U.S. since Washington's Securities and Exchange Commission issued warnings last month to cool overheated deal-making in the sector.

The closing of the Artisan Acquisition offering on Friday also came amid a market sell-off this week triggered by growing fears of global inflation that saw the Nasdaq 100 index decline 4.5%.

"The books were covered within two hours after launch despite a particularly volatile market backdrop, with strong demand from institutional investors and global family offices across Asia, EMEA (Europe, the Middle East and Africa) and the U.S.," said John Lee, vice chairman and head of greater China global banking at UBS, the lead joint bookrunner on the deal.

According to data from Dealogic, only $4 billion was raised in the U.S. by SPACs in April and the first half of May. This compared with more than $35 billion in March alone.

Cheng tops the third-generation leadership at New World Development, a Hong Kong conglomerate with interests ranging across property, utilities, transportation and hotels. He succeeded his father, Henry, last year to become chief executive of New World and is also a director of Chow Tai Fook Enterprises, the unlisted holding company for other family investments, as well as of Chow Tai Fook Jewellery Group, the world's second-largest jewelry retailer by market value.

Artisan Acquisition issued 30 million units at $10 apiece in the IPO, according to its prospectus. Each unit consists of a share of common stock and one-third of a warrant, a right to buy a share of common stock, exercisable at $11.50. As sponsor of the SPAC, Cheng's Artisan LLC received 5.3 million warrants, priced at $1.50 each, in a private placement.

Funds managed by Hong Kong's Aspex Management and PAG Capital each invested $60 million in the SPAC ahead of the IPO.

The IPO proceeds will rise to $345 million if the underwriters exercise an overallotment option included in Artisan Acquisition's prospectus.

China-focused fund managers including Primavera Capital and Hopu Investment raised capital via U.S. SPAC listings earlier this year. Others lined up to raise SPAC capital include billionaire Li Ka-shing, people familiar with the activity say.

The SEC last month warned that SPACs might need to use a different accounting treatment for warrants, which would affect the companies' financial profile. The regulator also warned that SPACs should not be used as a means of avoiding disclosure of important corporate information to investors.

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