The Singapore Stock Exchange is accelerating plans to become Asia’s first major stock exchange to list special purpose acquisition companies, aimed at capitalizing on a surge in foreign investment in fast-growing tech start-ups.
SGX said it would begin a formal consultation within two months to allow blank check companies to register in the city-state. The exchange has already held talks with global banks and issuers, according to several people involved in the talks.
Singapore would be the first exchange in Asia to join the rush of tech-driven Spacs, one of the most popular asset classes in the United States, where blank check vehicles grossed a record $ 80 billion in 2020.
Sponsors raise capital by listing Spacs then looking for a business to acquire or merge with. The structure offers companies an alternative way to go public by introducing expensive and time-consuming take-over bids.
Tan Boon Gin, managing director of SGX’s regulatory unit, said this month that the exchange received a number of expressions of interest. By giving issuers faster access to the market and more price certainty, Spacs would “benefit capital markets both locally and regionally,” according to the exchange.
Bankers said SGX would be well positioned to attract Asian-based, regionally-oriented acquisition vehicles that have been listed in the United States, such as Bridgetown Holdings, a Spac backed by the Hong Kong businessman. Richard Li and Silicon Valley investor Peter Thiel.
Bridgetown raised $ 595 million in an IPO in the United States in October, making it the largest Southeast Asia-focused Spac. Bridgetown 2, launched this month, is looking to raise $ 200 million to target other Asian businesses.
Udhay Furtado, co-director of Citigroup’s Asian capital markets business, said there was a “backlog” of financial sponsors aiming to list Spacs targeting Asian companies, particularly in Southeast Asia.
More than five US-based Asia-based sponsor Spacs have announced plans to list or have gone public in the first two weeks of 2021, including one by Hong Kong-based Primavera Capital and Princeville Capital.
SGX’s pursuit of Spac comes as some of Southeast Asia’s most prominent unicorns, or private companies worth at least $ 1 billion, are expected to seek public listings this year. These include the Grab and Gojek apps, valued at $ 16 billion and $ 10 billion respectively, and an Indonesian e-commerce startup. Tokopedia, recently valued at $ 7.5 billion.
SGX, which suffered a radiation chain, could be a precursor because there is more incentive to authorize Spacs, Furtado said. The surge in the exchange follows less successful attempts to attract tech names, such as partnerships with the Nasdaq and Tel Aviv stock exchanges.
The Singapore Stock Exchange also faces competition from regional rival Hong Kong, which has attracted a steady stream of “Homecoming” lists by Chinese tech groups seeking to reduce their dependence on Wall Street amid tensions between Washington and Beijing.
“[SGX] may not be able to compete with the Hong Kong stock exchange in terms of tech IPOs, so it’s trying to find another edge, ”said Margaret Yang, strategist at DailyFX.
The Hong Kong Stock Exchange has not been an option for Spacs in Asia due to its strict backdoor listing rules, imposed due to concerns about listed cash shells that can access funding without a review depth of the IPO.
However, the Spacs were critical lack of transparency and offers better returns for sponsors than for shareholders.
A Singapore investment banker said SGX had proposed modifications to the US model of Spacs to make blank check vehicles more “investor friendly”, including requirements to ensure that only qualified sponsors can lift. a Spac and changes in incentives so that sponsors could not leave with disproportionate financial gain.