Chinese gamer-platform operator Quwan set for Hong Kong share listing via SPAC merger with Vision Deal

Quwan Holding, which operates a Chinese gamer-centric networking platform, is set for a listing in Hong Kong via a merger with a special-purpose acquisition company (SPAC) marking the second such deal in the city.

Vision Deal HK Acquisition, a SPAC backed by former Alibaba Group Holding executive Wei Zhe, announced in an exchange filing on Friday that it has agreed to acquire an aggregate of 6,286,210 Quwan Holding shares for HK$298 million.

The de-SPAC deal comes with a private investment in public equity (PIPE) with 12 corporate investors including Zheshang International Financial Holdings and Orient Asset Management (Hong Kong), as well as individual investors, according to the filing.

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The proceeds from the PIPE will be HK$576 million, which could be adjusted to as much as HK$610 million. From this, HK$298 million will be used to acquire shares from shareholders in Quwan, including Dream League, Matrix Partners, Skycus China Fund and Tencent-backed Image Frame Investment (HK).

China International Capital Corporation (CICC) is the sole sponsor of the deal, which still needs a green light from China's securities regulator.

Quwan, founded by Song Ke in Guangzhou in 2014, runs TT Chat, a networking platform for gamers.

The company reported gross profit of 893.2 million yuan (US$125 million) for the first six months of 2023. That followed a 1.84 billion yuan gross profit in 2022, driven by increased revenue from value-added services, such as sales of virtual items, according to the filing. TT Chat had 13.8 million average monthly active users in 2022.

The Guangzhou-based company filed for a conventional initial public offering in Hong Kong in 2021, and refiled the listing in June.

SPACs are shell companies created to raise financial war chests and buy assets within a limited period of time, usually 18 to 24 months. Hong Kong's stock exchange rolled out rules to permit SPAC deals in 2021 amid a craze for the tactic in the US, but the fad faded in less than two years.

The first successful de-SPAC transaction in Hong Kong was the merger in August of ZG Group, operator of a Chinese steel trading website, with blank-cheque firm Aquila Acquisition. Aquila has yet to receive clearance from the China Securities Regulatory Commission to complete the deal.

Funds raised by share listings in Hong Kong have declined 59 per cent year on year to HK$41.3 billion as of November 17, according to a November report provided by EY. A total of 61 companies were listed in the city in 2023, a year-on-year decline of 19 per cent.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

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