SPAC issuance drops off a cliff in the U.S. but they still drive near-record merger activity in Asia.

The number of mergers and acquisitions in Asia excluding Japan reached the second-highest level in history in the first half of 2021, driven by special purpose acquisition companies or SPACs, according to «Digitimes Asia».

They quoted UBS head of Asian M&A Samson Lo, who cited Dealogic data indicating that the year-on-year deal volume increased 69 percent to $648 billion.

U.S. SPACs Drop Sharply

Dealogic data issued in July indicated that SPAC issuance in the U.S. collapsed in the second quarter, with much of the activity undertaken in the first three months of the year. According to them, 350 Securities and Exchange Commission (SEC) SPAC IPOs were priced in the first half, raising $107.6 billion - although those numbers fell to the single digits in April, May and June. A total of 155 deals SPAC business combinations worth $379 billion were announced in the first half.

«Although new issuances have declined in 2Q21, SPACs typically have a 24-month window to complete a transaction, so deals made by SPACs in the U.S. could continue unabated in the coming quarters,» Dealogic said.

Continued Momentum

According to Lo, however, the momentum seen in Asia in the first half is likely to spill over to 2022. Deals for the whole of 2021 are seen reaching a total of $940-978.8 billion in value, up 20-25 percent from last year, the Digitimes indicated.

According to Lo, UBS had completed nine major deals by the end of September comprising Gogoro and Poema, Prenetics and Artisan, and Tim Hortons China and Silver Crest. 

SPACs in Driver Seat

A high percentage of current deals came from technology, media and telecom, comprising car tech, fintech and e-commerce, the publication reported.

According to Lo, there are about 40 SPACs in Asia and UBS is expecting further tech unicorns will undergo SPAC deals in Asia.

Chinese Divestments

Because of current political tensions, a number of companies have sold businesses in China and the country saw lower transaction volumes as a result, according to Digitimes. Such deals included U.S. supplement maker Mead Johnson, Germany's Metro and France's Carrefour.