HONG KONG’S stock exchange operator said Friday that blank check companies, known as SPACs, are allowed for listings in the city at the start of next year and it has set a strict regime to safeguard investors.

The move makes the Hong Kong stock exchange the latest global bourse to tap demand for the investment vehicles although interest in them has waned from earlier this year.

After a consultation period on proposed rules, the Hong Kong exchange decided to keep in place a fundraising threshold of HK$1 billion (US$128 million), while trimming the minimum required backing of institutional investors to 20, according to a conclusion released by Hong Kong Exchanges & Clearing Ltd. (HKEX).

Retail investors are still barred from investing in the special purpose acquisition companies (SPACs) as proposed in the initial regime.

Some investment banks and corporate advisers had said the initial regime proposals were too onerous and would make Hong Kong uncompetitive, although the adjusted rules remain stricter than those in the United States.

Sources said Hong Kong hoped to attract investors from the mainland to list SPACs that raise cash to buy private firms and take them public without a traditional initial public offering (IPO).

Hong Kong has taken a careful approach to allowing SPAC listings after in the past being hit by scandals surrounding shell companies.

SPACs surged in popularity in the United States about a year ago but the pace of capital raising has slowed as investors have taken a more cautious approach after the poor financial performance of many SPACs and a regulatory crackdown led by the U.S. Securities and Exchange Commission.

(SD-Agencies)