NAME: Aquila’s De-SPAC Transaction in Hong Kong
LAW FIRM: JunHe, Shihui Partners, Allen & Overy, Freshfields Bruckhaus Deringer, Kirkland & Ellis, Maple Groups
JURISDICTION:  Cayman Island, China, Hong Kong
PRACTICE AREAS: Capital markets
INDUSTRY SECTORS: Industry and manufacturing, Technology and telecommunications

Aquila’s de-SPAC transaction in Hong Kong is our deal of the month for September.

Aquila, Hong Kong’s first Special Purpose Acquisition Company (SPAC) listing, entered into a merger transaction agreement with Chinese iron and steel e-commerce platform ZG Group, marking the first de-SPAC deal announced in Hong Kong after the city’s regulators rolled out a new regulatory regime for SPAC in 2021.

The deal is now pending voting by Aquila’s shareholder which is expected to take place in early December. Upon completion, Aquila will become a wholly-owned subsidiary of the target, with ZG Group becoming the listed company while Aquila will be de-listed from the HKEX.

According to the company’s website, Aquila previously raised about HK$1 billion and the firm intended to target technology-enabled companies in the ‘new economy' sector such as green energy, life sciences, and advanced technology and manufacturing in Asia, with a particular focus in China.

ZG Group was valued at around HK$10 billion, with approximately HK$605 million coming from the committed private investment in public equity (PIPE) investment.

The first-of-its-kind transaction sets the standard for the de-SPAC structure and documentation. It also reveals more details on how a de-SPAC transaction will be executed in practice.

Freshfields Bruckhaus Deringer represented Aquila in the de-SPAC transaction. The firm previously advised Aquila on its SPAC listing in Hong Kong.

Kirkland & Ellis acted as the legal counsel for ZG Group on Hong Kong and US law with Chinese law firm Shihui Partners advising the target on PRC law.

JunHe advised joint sponsor including China Merchants Bank International, HSBC Holdings and UBS Group on PRC law while Allen & Overy counselled on Hong Kong and US law.

Maple Groups advised both the shell and target on Cayman Islands law.