AlphaTime Acquisition Corp. (ATMC) to Combine with HCYC Group

AlphaTime Acquisition Corp. (NASDAQ: ATMC) has entered into a definitive agreement to combine with insurance brokerage HCYC.

Hong Kong-based HCYC Group functions as a registered holding company, but conducts its insurance brokerage operations through its subsidiary, HCYC Asia.

The combined company is expected to trade on the Nasdaq once the deal is completed in early 2024.

Transaction Overview

AlphaTime has about $51 million in its current trust after seeing 31.32% of its shares redeemed through an extension vote. The parties intend to use commercially reasonable efforts to secure a PIPE of at least $3.75 million.

HCYC shareholders will receive 7,500,000 ordinary shares of the company as consideration in the deal.

At the closing, 750,000 ordinary shares issued to the principal shareholder will be deposited into an escrow account for the benefit of the shareholders immediately before the closing.

In terms of an earnout, pre-closing shareholders are entitled to a portion of up to 1,500,000 ordinary shares. These are to be dispersed in equal halves if the company generates net income exceeding $5 million and $10 million in 2024 and 2025, respectively.

If the 2024 target is missed but the 2025 net income exceeds $15 million, all 1.5 million shares will be dispersed. The SPAC has not entered into a lock-up agreement at this time.

The parties have not yet released their investor presentation, but ATMC’s profile page will be updated once additional information is made available.

Quick Takes: While the official website of HCYC remains elusive, AlphaTime describes its business as being made up of four major segments including an insurance agency, insurance consulting, asset management, and insurance technology innovation.

Its subsidiary, HCYC Asia, has established its presence in Hong Kong over a span of thirteen years has served about 700,000 clients across mainland China and Southeast Asia, catering to business owners, executives, and other high-net-worth individuals.

It already has collaborations in place with major insurance entities like AXA China Region Insurance, AIA International, Prudential Hong Kong, and FTLife Insurance under HCYC Asia.

These strategic partnerships aim to deliver tailored services to both individual and corporate clients. HCYC believes that this collaborative approach grants them a unique competitive edge in the market, but without an investor presentation, it is unclear what the market is like or who its main competitors are.

Looking ahead, Hong Kong’s HCYC Group aims to act as a conduit between policyholders and insurance firms.

In terms of products, it is actively pursuing further strategic collaborations with leading global insurance companies to broaden the scope of high-quality offerings available worldwide. With a foothold already established in Asia, it will be interesting to consider what regions it will use its forthcoming partnerships to expand into next.

As for AlphaTime, the SPAC currently has an upcoming completion deadline of February 4. But, it can extend this timeline until January 2025, giving it a year to raise the anticipated $3.75 million PIPE and close the deal.

The parties were rumored to be discussing a merger back in June; however, there were no traces of SEC filings or official press releases confirming the announcement during that time.

Once completed, HCYC would join 10 other insurance de-SPACs, which last closed at a median share price of $9.08, adjusted for stock splits. While that median gives the appearance of a healthy group, the most successful companies in the cohort completed their SPAC deals between 2016 and 2020.

But, HCYC may be in the right place to capture some upcoming growth. Life insurance, which generated more premium revenue in China than property, health and accident insurance combined in 2022, is expected to grow at a CAGR of 9% through to 2028. That would boost it to $893 billion that year.

Overall, however, it remains difficult to further evaluate this without additional information on the deal terms and the company itself.

ADVISORS

• Company
  • Celine & Partners PLLC is serving as legal advisor
• SPAC
  • Winston & Strawn LLP is serving as legal advisor.
  • Han Kun Law Offices LLP and Ogier are serving as Hong Kong and Cayman legal advisors