Keen interest could see first Singapore SPAC listings within 3 months

Singapore

SPECIAL purpose acquisition companies or SPACs could find their way onto the Singapore Exchange (SGX) mainboard as early as this year, and several local private companies have told The Business Times that they are open to the possibility of merging with SGX-listed SPACs to go public.

SGX said on Friday it could receive its first SPAC submission in weeks. The framework to allow the blank-cheque companies had been introduced earlier this month.

Entities said to be keen on a SPAC listing include European asset manager Tikehau Capital, Temasek-backed Vertex Holdings and Ravi Thakran's Turmeric Capital.

Private equity (PE) firm Novo Tellus Capital Partners had also told BT that SGX SPACs are something it would be interested in pursuing.

Stephen Bates, partner and head of transaction services at KPMG in Singapore, said the number of players with interest is in the double digits. "I'd expect we'd see at least two or three before the end of the year, if not more," he added.

SPACs could help bring high-tech growth companies to Singapore, tying in with initiatives announced by the government on Friday for a "concerted push" to establish Singapore as the listing destination of choice for local and global market leaders.

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These latest initiatives include higher grants to help defray listing costs as well as a S$1.5 billion fund to invest in high-growth companies listing in Singapore.

Credit Suisse's head of South-east Asia equity capital markets, Ho Cheun Hon, said the measures announced on Friday are constructive, and should be well received by business owners, managers and stakeholders who view an IPO as one stage of a company's life cycle as opposed to being a transaction or event.

Mr Ho is also optimistic that the first vintage of SGX SPACs will come to market by the end of the year.

"We believe there is broad interest in the SGX framework from high quality potential sponsors - both domestic and international - including PE and venture capital (VC) fund managers, as well as entrepreneurs and corporates who have had success in acquiring and building businesses," he said.

Tikehau Capital declined to comment on whether it plans to list a SPAC, but Neil Parekh, its head of Asia, Australia & New Zealand, noted that the Asia-Pacific region currently has many high-growth private companies with mature management teams that are ready for the public markets - especially in proptech, healthcare, consumer and selectively in the fintech space.

With plenty of fast-growing startups in the region for SPACs to merge with, KPMG's Mr Bates said the so-called de-SPACs could come by the second half of next year.

Companies BT spoke to said they would consider factors including market depth and liquidity, choice of strategic partners, investor familiarity, and valuations, when choosing where to de-SPAC.

Kong Wan Sing, founder and chief executive at co-working operator JustCo, said they would be keen to speak to sponsors on a local SPAC merger.

"Having a SPAC, we are more able to control who we choose as a strategic partner to grow with - as opposed to an IPO where it is mostly financial investors," he said. "In Singapore, there is support from SGX. And the new initiatives announced by the government on Friday are attractive as they bring together public and private players to create a more dynamic ecosystem."

Telco Circles.Life is also open to exploring a listing via a SPAC in Singapore.

Chief financial officer Mak Chee Kiong said the company is not actively looking at this but would be open to having a conversation if the interests are aligned.

The company has "grown quite well" since its founding, making inroads in markets such as Australia and Taiwan, he said, and the mobile virtual network operator "will definitely need further injection of capital to continue the growth path".

SPACs would be a more viable option for growth companies, as startups merging with a SPAC can receive a cash infusion from investors buying into their growth story, he said. Traditional IPOs, on the other hand, tend to focus more on historical results.

Earlier this month, property portal 99.co told BT it would be interested in SGX SPACs.

Michael Lints, partner at VC firm Golden Gate Ventures, said their portfolio companies that are looking at potential listings in the coming two years will probably explore Singapore as an option as well.

Increased activity from SPAC IPOs and de-SPACs would be a boost for the Singapore market, which currently lags Thailand, Indonesia and the Philippines in terms of capital raised from IPOs this year.

Mark Matthews, head of research for Asia-Pacific at Julius Baer, said at a press briefing last Tuesday that the Singapore market has been "left behind" and has not managed to get listings such as Grab or Sea.

"There could (now) be a little more moral suasion applied to those companies to list here in Singapore, and so I think it's a good idea to pursue SPACs, an excellent idea in fact," he said.

He noted that Singapore has had challenges with speculative and lower quality companies listing in the past, but added: "Hopefully with the SPACs, there'll be a change in that."

SPACs could also change the nature of Singapore's market.

"In the recent past, listings on the SGX have provided outstanding returns from securities focused on generating income," said Tikehau's Mr Parekh. "The new SPAC framework with a focus on high growth companies with mature management teams will help create listings that will help generate capital gains for investors."