Chinese authors has barred the country’s investment banks from acting as promoters of blank-check companies in Hong Kong, according to Reuters citing sources familiar with the matter.
The China Securities and Regulatory Commission (CSRC) has decided to take the step which is said to have communicated to investment banks earlier this year citing concerns over risk associate with such investment vehicle.
However, promoting such transactions will be off-limits, the investment banks will be allowed to work as advisors on special purpose acquisition company (SPAC) transactions under Hong Kong’s new rules for such listings, said the sources.
The development comes in as China continues to set tougher stance for offshore capital raising by domestic companies.
SPAC has become increasingly popular investment vehicle since late 2000 given it simplicity in terms of regulations relative to initial public offerings.
