LionRock launches Hong Kong SPAC

The sponsor entity of Trinity Acquisition Holdings is owned by Daniel Tseung, founder of LionRock, Li Ning, founder of the eponymous Chinese sporting goods brand, and Astrapto, a newly established private equity firm led by David Chou, formerly a banker and investor at Goldman Sachs.

LionRock and Li are frequent collaborators. Last year, LionRock acquired British shoe brand Clarks and then brought in Viva China – a holding company controlled by Li that already owns fashion brand Bossini – as a 51% shareholder. Li-Ning – the company – also agreed to participate as anchor LP in a sports-focused fund launched by the private equity firm.

Trinity Acquisition will focus on global consumer lifestyle companies with compelling growth potential in China, leveraging the networks and expertise of its founders, according to a prospectus.

The size and pricing of the offering have yet to be finalised, but the structure is in line with those seen in the US: units comprising ordinary shares and convertible warrants; investors holding the right to convert once the SPAC consolidates a merger or cash out; a separate class of shares issued to the founders for a nominal sum; and founder participation in the offering through warrants.

A merger must be announced within 24 months of the offering and consolidated 12 months after that, or investors can claim their money back.

When Hong Kong released its proposed SPAC framework, there were concerns at plans to include a requirement that investors could only redeem their shares post-merger if they voted against the deal – which could undermine sponsor confidence in the ability to get transactions through.

However, this provision was removed from the final guidelines. Other compromises included reducing the number of institutional investors that must participate in a SPAC offering and lowering the size requirement for the PIPE that underpins the de-SPAC process (although the latter was counterbalanced by a call for greater institutional participation in the PIPE).

It remains the case that SPACs must be at least HKD 1bn (USD 128.5m) in size, sponsors meet certain qualification criteria, and participation in SPAC offerings is limited to professional investors. The merged entity must also meet the same requirements that apply to all newly listed companies, which negates the speed advantage of a SPAC process over a traditional IPO.

Hong Kong and Singapore have both launched SPAC regimes as they seek to stem the flow of Asian technology companies listing via this route in the US. Singapore moved faster, with SPACs sponsored by the likes of Vertex Venture Holdings and Novo Tellus Capital Partners already trading.

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• Topics
• Greater China
• IPO
• Consumer
• Hong Kong (China)
• SPAC
• Lion Rock Capital