Large SPAC listings gain momentum in Korea

[Courtesy of KB Securities]

The Korean special purpose acquisition company (SPAC) market with typical offerings of around 10 billion won ($800,000) is now witnessing consecutive listings of large-scale SPACs with over 30 billion won.

According to sources on Monday, KB Securities Co. is conducting book building for KB SPAC No. 24, which has a public offering size of around 32 billion won. KB Securities recently completed the merger of KB SPAC No. 20 and Opticore within the past six months and submitted two merger applications for other SPACs. SPAC listing is a faster and more simplified process compared to that of a traditional IPO as a paper company is created for a merger and acquisition (M&A) deal to list an unlisted company.

On Tuesday, NH Investment & Securities conducted public subscriptions for NH SPAC No. 29 with a public offering size of 25.5 billion won following a two-day book building last week.

Considering that many previously listed SPACs had public offering sizes of around 10 billion won, the current SPAC listings are targeting companies with a market value of around 300 billion won.

SPACs provide a relatively easy market entry route for companies, enabling them to secure stable funding even during a downturn in the stock market. Due to the stability with the principal and interest guaranteed for investors, even if the merger is not successful within a certain period, SPACs tend to be popular during periods of high stock market volatility.

From a company’s perspective, SPAC listings can be an attractive funding route for companies with a financial stability rather than growth potential and companies with a low ownership stake of majority shareholders.

Previously, SPAC listings had been biased towards small-sized companies because it is easier to find a suitable merger target.

However, there is a growing expectation towards large-scale SPACs. At the end of last month, Hana Financial No. 25 SPAC, a mega-sized SPAC with an offering size of 43 billion won, drew significant attention when it submitted a preliminary review application to the Korea Exchange for a merger with PIE, a battery inspection solution company.