SPAC promoters shun Chinese deals amid mounting tensions

At least four SPACs have revised their IPO filings in recent months to remove China from their areas of interest

The globetrotting dealmakers starting blank-cheque firms are increasingly telling investors there’s one place they won’t go: China. 

At least four special purpose acquisition companies have revised their IPO filings in recent months to remove China from their areas of interest. The changes come as the US securities regulator demands volumes of disclosures on the risks of doing business in China, while Beijing authorities are scaring the market with their widening crackdown on corporate excesses. 

When Asia-focused Pacifico Acquisition Corp. first unveiled its listing plans in July, it said its search would focus on Chinese new energy, biotech and education companies. “China” appeared 45 times in that initial filing as Pacifico touted the hot prospects for those industries in Asia’s biggest economy. Just two weeks later, it amended its prospectus to say it would look everywhere in the region except for China. It eventually raised $57.5 million.

Former UBS Group banker Patrick Ngan’s Nova Vision Acquisition and Kairous Acquisition, started by Malaysia venture capital investor Joseph Lee, also updated their plans to explicitly say they’ll avoid China. 

The SPAC boom encouraged many dealmakers with China connections to start their own blank-cheque firms, hopeful that the nation would prove a good place to find hot startups seeking a shortcut to the public markets. Things changed over the summer, when the US SEC began demanding issuers include increasingly strident warnings about how Chinese deals could go wrong.