HH&L Acquisition, a Hong Kong-based blank cheque company that focuses on Asia’s growing healthcare sector, is seeking to raise up to $300 million in an initial public offering (IPO) in the US, according to a regulatory filing.
The special purpose acquisition company (SPAC), headed by former Goldman Sachs’ Asia-Pacific chief Ken Hitchner, is offering 30 million units at $10 each.
Each unit consisting of one share of common stock and one-half a warrant, exercisable at $11.60. At the proposed deal size, HH&L Acquisition would command a market value of $375 million, according to its filing.
SPACs are exchange-listed shell firms that raise money through IPOs and merge with companies by enticing them with shorter listing timelines. Merging with a SPAC has become an increasingly popular method for closely-held businesses to raise capital for growth.
SPACs typically acquire firms as quickly as within four to five months. They are given up to two years to seek targets. If they can’t fulfil that mandate, they will have to return all the money to the public shareholders.
The biggest SPAC focused on Southeast Asia is the $595-million Bridgetown Holdings, which is backed by Hong Kong tycoon Richard Li and venture capitalist Peter Thiel. Bridgetown is reportedly considering a potential merger with Indonesia’s e-commerce giant Tokopedia in a deal that could value the unicorn at $8-10 billion.
Eye on healthcare
Founded in 2020, HH&L Acquisition said that while it may pursue a business combination in any business or industry, it intends to focus on healthcare or healthcare-related companies in Asian markets, especially in Greater China.
“We believe that the healthcare sector in Greater China or other Asian markets is a compelling target sector for our initial business combination due to a variety of positive market trends,” HH&L said.
A report released by S&P Global Market Intelligence in January 2020 showed that approximately $61 billion was raised in IPOs of healthcare companies globally between 2017 and 2019, a 28% rise from just $48 billion raised between 2014 and 2016.
In the fourth quarter of 2019, China had the highest number of IPOs recorded in the healthcare sector as 16 firms from the country listed their shares on public exchanges globally, the report added.
HH&L plans to list on the NYSE under the symbol HHLA.U. Goldman Sachs (Asia) and Credit Suisse are the joint bookrunners on the deal.
Earlier this month, SPAC Provident Acquisition, led by Winato Kartono and Michael Aw Soon Beng, Provident Group’s founding partner and partner raised $200 million in a US IPO.
Tiga Acquisition and Aspirational Consumer Lifestyle Corp, both Singapore-based, have also filed to raise $200 million and $225 million IPO in the US, respectively.