Tikehau’s S$170 million Pegasus Asia Spac to liquidate due to market conditions

PEGASUS Asia said it will not conclude a business combination “after considering macroeconomic and market conditions”, partially confirming an earlier media report that stated it was one of two remaining Singapore Exchange (SGX)-listed special purpose acquisition companies (Spacs) to be dissolved.

In a Wednesday (Dec 20) filing, Pegasus said it would make an announcement in due course on the next steps for shareholders to redeem all of their issued outstanding Class A ordinary shares.

Following this, the Spac will cease operations and wind up its business.

There will be no redemption rights nor liquidating distributions regarding the company’s warrants.

Shares of Pegasus were unchanged at S$4.84 as at 9.38 am on Wednesday with no trades done, before it requested a trading halt effective from 9.39 am.

Pegasus – which raised gross proceeds of S$170 million in its January 2022 initial public offering (IPO) – is sponsored by European asset manager Tikehau Capital as well as Financiere Agache, which is luxury goods company LVMH chief executive Bernard Arnault’s family office. 

Earlier this year, the sponsor’s Pegasus Europe Spac was also wound up after failing to find a target.

Singapore-listed Spacs have two years to announce their potential business combination, which is also known as a de-Spac transaction. If the Spac is unable to find a suitable acquisition target, it is required to dissolve and return the funds to investors.  

The three local Spacs all listed in January 2022, putting them close to the deadlines for their business combinations.

Earlier, The Edge Singapore reported that Pegasus Asia and the other remaining SGX-listed Spac, Novo Tellus Alpha Acquisition (NTAA), were seeking to dissolve the blank-cheque companies due to lower-than-expected numbers amid unfavourable market conditions.

Citing unidentified sources familiar with the matter, the media outlet said Pegasus Asia was expected to make its announcement by Dec 22. Meanwhile, NTAA is anticipated to release a similar announcement next week.

In response to queries from The Business Times, NTAA executive chairman and CEO Loke Wai San said the Spac “categorically denies” reports that they are submitting to wind up next week.

He noted that NTAA has not made any announcement yet on any potential extension or liquidation of the Spac ahead of its business combination deadline.

He also referred to the Spac’s earlier disclosure in November, which stated that NTAA has been active with “building and advancing a pipeline of potential business combination targets”.

NTAA later issued a clarification on SGX saying that press reports stating that the company is not looking to merge with any target companies and is instead seeking to dissolve are “inaccurate”.

Pointing out that activities to identify an optimal business combination target are ongoing, the company said it “has not identified a conclusive business combination target and has not entered into any written binding acquisition agreement in relation to a potential business combination”.

The company will “promptly” make the relevant disclosures at the appropriate time, it added.

Singapore’s other Spac – Vertex Technology Acquisition Corporation (VTAC) – merged with livestreaming platform 17Live on Dec 8, but faced heavy redemptions from shareholders.

VTAC shareholders exercised their redemption right for some 26 million shares. Excluding the holdings from Vertex Co-Investment Fund (Vertex SPV) and Venezio Investment, which had committed not to redeem their shares, the redemption rate would be 87.9 per cent.

Shares of 17Live have plunged following the business combination, closing at S$1.55 on Wednesday – less than a third of VTAC’s IPO price of S$5.

Paul Chew, head of research at Phillip Securities Research, noted that beyond finding a target, Spacs also have to ensure that minority shareholders have appetite to fund the de-Spac transactions.

“Target companies seek out Spacs due to valuations and the readily available pool of funds. Both conditions no longer prevail,” he said.

He added that the investment rationale for Spacs was for investors to be ahead of the queue to access technology listings.

“Investors capital was protected and free warrants were available. Until another fervour for technology stocks materialise, Spacs are unlikely to be popular,” he said.

Nevertheless, he does not expect a significant impact in Singapore, given that the Spacs had minimal volume.

In response to queries from BT, an SGX Group spokesperson noted that new structures and products such as Spacs are essential to market development.

“They don’t always succeed right off the bat; building investor familiarity and a pipeline of Spac companies will take time, as the history of the Reit sector has shown,” the spokesperson said.

The spokesperson added that “getting a de-Spac done is no mean feat” in the current macro environment.

“We will learn and improve in readying the market. We have said right from the start that the Spac framework will likely be of interest only to companies for which a conventional IPO may not be optimal. We continue to hold this view,” the spokesperson said.