January 2022: Hong Kong launched a SPAC regime deliberately engineered to avoid America's bubble. Three years later: five SPACs listed, four liquidated, one de-SPAC completed. The regime avoided the bubble — by avoiding the market altogether.
1. The doom loop by design
2. What the rules got right — and what they cost
| Rule | Intention | Effect |
|---|---|---|
| PI-only trading | Protect retail from speculation | Killed secondary liquidity |
| High-quality sponsor requirements | Ensure serious sponsors | Narrowed the supply of deals |
| Independent PIPE investment requirement | Validate de-SPAC valuations | Made closing dependent on raising new money in a weak market |
| Warrant structure restrictions | Limit retail speculation | Removed a reason sponsors bothered |
RegSir's take
Design philosophy is the lesson: a regime can optimise for "no scandals" or for "a functioning market" — rarely both. Hong Kong optimised for no-scandals and got exactly that: no scandals, no market. The Aquila–ZG de-SPAC proves the mechanism can work — once. The honest post-mortem isn't that SPACs are bad; it's that thresholds should gate who participates at issuance, not who can trade afterwards — disclosure polices quality better than exclusion. When you design a market with no constituency for the product, you haven't made it safer; you've made it not exist.
3. Compliance takeaways
- Regime design is a trade-off: "avoiding mistakes" is not free — it has an opportunity cost measured in the market that never forms.
- Watch the Aquila precedent: if more de-SPACs follow, the structure may find its niche; if not, Chapter 18B remains a paper regime.
- Sponsor economics: SPAC economics depend on sponsor promote + PIPE demand — in a thin market both collapse; model that, not the headline vehicle.
4. Official sources & reporting
| Document / report | Link |
|---|---|
| HKEX Listing Rules Chapter 18B (SPACs) | en-rules.hkex.com.hk ↗ |
| Aquila–ZG Group de-SPAC completion (2025.03) | hkexnews.hk ↗ |
| HKEX SPAC listings & liquidation announcements | hkex.com.hk ↗ |