By ZG Group, the operator of a leading steel transaction website, has announced its plans to go public through a merger with a special purpose acquisition company (SPAC) in a groundbreaking deal for the Hong Kong market. This will be the first-ever SPAC merger to take place in Hong Kong.
According to a filing on Thursday, ZG Group will combine forces with Aquila Acquisition, a blank-check company backed by a unit of China Merchants Bank. The deal values ZG Group at an impressive 10 billion Hong Kong dollars ($1.27 billion).
As part of this agreement, ZG Group, formerly known as Zhaogang.com, will receive HK$605.3 million in gross proceeds from private investments. Notably, a subsidiary of Trafigura Group, a major player in commodity trading, is among the investors participating in this venture.
ZG Group’s online platform facilitates a wide range of steel-related transactions, including trading, warehousing, logistics, and processing. It serves as a crucial link connecting businesses across the entire supply chain of metal.
SPACs are investment vehicles that raise capital from investors for the purpose of going public on stock exchanges and subsequently merging with private businesses. Since early 2022, Hong Kong has permitted SPACs, and Aquila Acquisition was the inaugural listing in the city.
The Hong Kong Exchanges & Clearing, the exchange operator, has implemented stringent requirements for SPAC deals. Currently, only professional investors are permitted to trade SPAC shares, while individual investors can only participate after the target company has completed its merger with the SPAC and gone public.
The merger between ZG Group and Aquila Acquisition is anticipated to be finalized in the fourth quarter. However, for ZG Group to proceed with its listing application on the Hong Kong exchange, it will require approval from both the exchange itself and China’s securities regulator.
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