Summit Healthcare Acquisition, a blank cheque firm led by sponsors including the founder of Asia’s healthcare private equity firm CBC Group, has filed with the US Securities and Exchange Commission (SEC) to raise up to $200 million in an initial public offering (IPO).
According to an SEC filing on Monday, sponsors of Summit Healthcare Acquisition include CBC Group’s founder and chief executive officer Fu Wei; Tan Bo, ex-president and CFO at Chinese biotech firm 3S Bio; and Ken Poon, founding partner of Hong Kong-based boutique advisory firm XCap Partners Limited and formerly Asia Pacific Head of Capital Markets Origination at Citigroup.
Snow Lake Capital, an Asian alternative investment manager with over $3 billion in assets under management (AUM); and the Valliance Fund, managed by global life sciences investment firm Valliance Asset Management, serve as anchor investors of the SPAC.
Hong Kong-based Summit Healthcare Acquisition is the latest to join the hottest trend in global dealmaking – IPOs for blank cheque firms, or special purpose acquisition companies (SPACs) – following the footprints of its Greater China PE counterparts like Primavera Capital Group, Hony Capital, and CITIC Capital.
A SPAC is a company that raises money through an IPO with the intention of merging with another firm, allowing the business to list more quickly. It typically acquires a firm as quickly as four to five months and is given up to two years to seek targets – or it will have to return all the money to public shareholders.
The SPAC fad, which started as a largely US phenomenon, is expected to go global with growing traction in regions including Asia. Refinitiv data shows that SPACs globally collected a combined $92 billion from IPOs in the first quarter of this year, already surpassing all of 2020. SPAC mergers, when the black cheque firm uses IPO funds to merge with a target, totaled $210 billion.
Currently, Asia only accounts for a fraction – about 11 out of 2021’s 304 SPAC IPOs and just $4.7 billion in SPAC mergers.
Summit Healthcare Acquisition will focus on potential acquisition targets in three verticals of the healthcare industry, namely pharma, medtech, and diagnostics. While it may acquire a business in any region globally, the SPAC primarily look for an asset with “a strong China nexus,” according to the filing.
“We believe the healthcare sector in Asia has historically benefited from the in-licensing of novel or differentiated therapies to address critical unmet medical needs in Greater China and other emerging Asia Pacific markets,” said the firm.
“Today, we are witnessing the rise of healthcare out-licensing from China, a phenomenon that creates a ‘two-way’ traffic bringing significant benefits to patients in both China and Western countries.”
The SPAC plans to raise the $200 million by offering 20 million units at $10. Each unit consists of one share of common stock and one-half of a warrant, exercisable at $11.50. It may raise an additional $30 million at the closing of an acquisition pursuant to forward purchase agreements with anchor investors.
At the proposed deal size, it would command a market value of $258 million.
Summit Healthcare Acquisition, which filed confidentially on February 3, plans to list on Nasdaq under the symbol “SMIHU.” New York-based BofA Securities is the sole bookrunner on the deal.