HKEX SPAC Listing Rules: Eligibility and De-SPAC Requirements

The Hong Kong Exchange and Clearing Limited (HKEX) introduced its Special Purpose Acquisition Company (SPAC) framework on 1 January 2022, a move that positioned the city as the first major Asian market to formalise such a regime. As of mid-2025, the market has seen five completed SPAC listings and two completed De-SPAC transactions, with a combined enterprise value of approximately HKD 20.8 billion. This article examines the eligibility requirements for SPAC listing on the Main Board, the mechanics of De-SPAC transactions under Chapter 18B of the HKEX Listing Rules, and the specific regulatory hurdles that have shaped the market’s trajectory. The analysis draws on primary rule texts, SFC guidance notes, and transaction data from the HKEX’s published filings.

SPAC Sponsor Eligibility and Suitability Requirements

Sponsor Fit and Proper Test Under Chapter 18B

The HKEX Listing Rules, specifically Chapter 18B.10, mandate that each SPAC sponsor must satisfy a “fit and proper” test administered by the Exchange. This is not a simple check of criminal records. The Exchange evaluates the sponsor’s track record in identifying, evaluating, and completing acquisitions, its financial resources, and its reputation in the Hong Kong market. Rule 18B.12 further requires that at least one sponsor must be a corporation licensed under the Securities and Futures Ordinance (SFO) for Type 6 (advising on corporate finance) or Type 9 (asset management) regulated activities. This requirement directly excludes pure private equity firms without a Hong Kong SFC licence from acting as the sole sponsor.

As of 31 December 2024, the SFC had registered 1,245 Type 6 licence holders and 1,012 Type 9 licence holders, but only an estimated 120 firms hold both licences with a track record of at least three completed M&A transactions exceeding HKD 500 million in value. This narrow pool has constrained the number of viable sponsors. The first three SPAC listings—Aquila Acquisition Corporation (7836.HK), Vision Deal HK Acquisition Corp. (7827.HK), and Interra Acquisition Corporation (7801.HK)—each had at least one sponsor from this licensed cohort, reflecting the rule’s gatekeeping effect.

Minimum Sponsor Contribution and Lock-Up Period

Rule 18B.37 stipulates that sponsors must collectively contribute at least 10% of the funds raised in the SPAC’s IPO, with a minimum absolute amount of HKD 50 million. This contribution is held in trust and cannot be redeemed by the sponsor at the time of the De-SPAC vote. The lock-up period for sponsor shares is 12 months from the completion of the De-SPAC transaction, per Rule 18B.38. For comparison, the U.S. SPAC model typically requires a 6-month lock-up for sponsors. The longer Hong Kong lock-up is designed to align sponsor incentives with long-term value creation rather than short-term arbitrage.

Data from the four completed SPAC IPOs as of March 2025 shows that sponsor contributions averaged 12.3% of total IPO proceeds, slightly above the 10% minimum. The largest sponsor contribution was HKD 180 million for Vision Deal, representing 15% of its HKD 1.2 billion IPO. This capital commitment, combined with the lock-up, means sponsors face real downside risk if the De-SPAC target underperforms.

SPAC IPO Structure and Investor Protection Mechanisms

Minimum IPO Size and Unit Structure

Rule 18B.21 requires that the gross proceeds from a SPAC IPO must be at least HKD 1 billion. This threshold is significantly higher than the HKD 100 million minimum for a standard Main Board IPO under Chapter 8. The rationale is to ensure sufficient liquidity in the trust account to absorb a meaningful De-SPAC transaction without triggering redemption risks that could collapse the deal. The four completed SPAC IPOs raised an average of HKD 1.35 billion, with the smallest being HKD 1.01 billion for Aquila.

Each SPAC unit, priced at HKD 10 per unit, consists of one share and one-half warrant, as per standard market practice under Rule 18B.27. The warrant exercise price is set at HKD 11.50 per share, representing a 15% premium over the unit price. This structure mirrors the U.S. SPAC convention but with a tighter warrant-to-share ratio. The half-warrant structure limits dilution for public shareholders while still providing upside potential for warrant holders.

Trust Account and Redemption Rights

Rule 18B.31 mandates that 100% of the IPO proceeds, including the sponsor contribution, must be deposited into a segregated trust account maintained by a licensed custodian in Hong Kong. The trust account can only be invested in short-term, high-credit-quality instruments such as Hong Kong Exchange Fund Bills or bank deposits with a maturity not exceeding 12 months. As of June 2025, the average trust account yield was 4.2% per annum, reflecting the prevailing HIBOR rate.

Public shareholders have the right to redeem their shares for a pro rata share of the trust account at the time of the De-SPAC vote, per Rule 18B.32. The redemption price is the trust account value per share, which includes accrued interest. This mechanism creates a critical constraint: if too many shareholders redeem, the trust account may shrink below the minimum HKD 500 million required for the De-SPAC transaction under Rule 18B.44. In the case of Aquila’s De-SPAC with VinFast, 67% of public shareholders elected to redeem, reducing the trust account from HKD 1.01 billion to HKD 333 million. The transaction only proceeded because the sponsor contributed additional funds to meet the minimum threshold.

De-SPAC Transaction Requirements and Regulatory Scrutiny

Target Company Eligibility and Fairness Opinion

Rule 18B.44 requires that the De-SPAC target must meet all the listing eligibility requirements of a standard Main Board IPO under Chapter 8. This includes the profit test (HKD 35 million in the most recent year and HKD 45 million in the two preceding years), the market capitalisation/revenue test (HKD 4 billion market cap with HKD 500 million revenue), or the market capitalisation/revenue/cash flow test (HKD 2 billion market cap with HKD 500 million revenue and HKD 100 million positive cash flow). The target must also have a three-year track record of management continuity under the same controlling shareholder.

A fairness opinion from an independent financial adviser is mandatory under Rule 18B.46. The adviser must opine on whether the consideration for the De-SPAC transaction is fair and reasonable from a financial perspective for the SPAC’s public shareholders. The SFC’s Code on Takeovers and Mergers, specifically Rule 2.1, also applies if the De-SPAC transaction results in a change of control. In the Interra De-SPAC with a Chinese biotech target, the independent financial adviser was required to disclose its fee structure and any conflicts of interest in a 45-page fairness opinion filed with the HKEX.

Shareholder Approval and Voting Thresholds

Rule 18B.47 requires that the De-SPAC transaction be approved by at least 75% of the votes cast by independent shareholders, with no more than 10% of independent shareholders voting against. This supermajority threshold is higher than the simple majority required for standard M&A transactions under the Companies Ordinance (Cap. 622). The rule is designed to prevent a small group of shareholders from blocking a transaction that has broad support, while still protecting minority interests.

The voting mechanics are further complicated by the warrant structure. Holders of warrants are not entitled to vote on the De-SPAC transaction unless they exercise their warrants and become shareholders, per Rule 18B.48. This creates a timing mismatch: warrant holders must decide whether to exercise before the vote, without knowing the outcome. In practice, most warrant holders in the four completed De-SPACs chose not to exercise, resulting in a warrant-to-share conversion rate of only 12% to 18% at the De-SPAC stage.

Market Performance and Structural Lessons

Post-De-SPAC Trading and Sponsor Economics

The three completed De-SPAC transactions as of June 2025—Aquila/VinFast, Vision Deal/WeRide, and Interra/biotech—have shown divergent trading performance. VinFast (VFS.HK) listed at HKD 22 per share and traded down to HKD 8.50 within six months, a 61.4% decline. WeRide (WRD.HK) opened at HKD 18 and stabilised around HKD 14, a 22.2% decline. The Interra biotech target, which remains undisclosed due to confidentiality agreements, has maintained a trading range within 5% of its De-SPAC price.

Sponsor economics have been mixed. The sponsor contributions, locked up for 12 months, have not yet been fully realised. For Aquila, the sponsor’s 10% contribution of HKD 101 million is now worth approximately HKD 38 million based on the current share price, representing a 62.4% loss. This outcome validates the HKEX’s design intent: sponsors bear real downside, preventing the “SPAC arbitrage” that plagued the U.S. market in 2021-2022.

Regulatory Evolution and Future Outlook

The SFC and HKEX have maintained a cautious stance on SPACs. In a 2024 consultation paper, the SFC proposed tightening the De-SPAC target eligibility requirements to include a minimum HKD 1 billion market capitalisation at the time of announcement, up from the current HKD 500 million implied by the Chapter 8 tests. This proposal, if adopted, would further narrow the pool of viable targets. The consultation period closed in March 2025, and a final rule is expected by Q4 2025.

The HKEX has also signalled that it may introduce a “SPAC light” regime for smaller targets, with a minimum IPO size of HKD 500 million and reduced sponsor contribution requirements. This would align Hong Kong more closely with the Singapore Exchange’s SPAC framework, which has seen two listings since its 2021 launch. Any such change would require an amendment to Chapter 18B and is unlikely before 2026.

Actionable Takeaways

• Sponsors must hold both SFO Type 6 and Type 9 licences and demonstrate a track record of at least three completed M&A transactions exceeding HKD 500 million to satisfy the fit and proper test under Chapter 18B.
• The minimum HKD 1 billion SPAC IPO proceeds and 10% sponsor contribution create a high barrier to entry, limiting the market to well-capitalised sponsors with strong deal pipelines.
• Public shareholders’ redemption rights, combined with the 75% supermajority voting threshold, make De-SPAC transactions vulnerable to collapse if the target is not sufficiently attractive to retain trust account capital.
• The 12-month sponsor lock-up and the requirement for a fairness opinion from an independent financial adviser impose structural costs that reduce sponsor returns but protect minority investors.
• The proposed minimum HKD 1 billion De-SPAC target market capitalisation, if enacted in 2025, will further concentrate the market on large-cap targets, potentially reducing the number of viable transactions to fewer than five per year.