SGX looking into listing of special purpose acquisition companies

Singapore

THE Singapore Exchange is looking into the possibility of listing special purpose acquisition companies (Spacs) and may launch a consultation as early as this quarter.

In a media briefing on Monday, Singapore Exchange Regulation (SGX RegCo) chief executive officer Tan Boon Gin said the exchange has noticed the popularity of Spacs listings in other markets.

"We have received enquiries and expressions of interest to do so with such a structure," Mr Tan said, noting that SGX had previously consulted on this in 2010. "We are now considering, given the current popularity of such a listing structure, whether to revive that consultation."

Spacs, also known as blank-cheque companies, are shell companies which raise capital through an initial public offering (IPO) for the purpose of acquiring an existing firm.

Their popularity increased in 2020, with some US$78 billion raised in the US last year, exceeding the combined total of Spacs in all previous years, according to Bloomberg.

"I think that the interest in Spacs is being driven by the current volatile conditions that we see," Mr Tan said.

He noted that an advantage of Spacs is that it provides a faster time to market, and more certainty in terms of price as well as execution. This can make the structure better placed to catch narrowing windows of opportunity.

Tham Tuck Seng, capital markets leader, PwC Singapore, told The Business Times that Spacs will benefit the Singapore capital markets ecosystem and increase the vibrancy of the mergers and acquisitions (M&A) space not only domestically, but also likely in the region given that many M&As are regional.

"This will further reinforce the status of Singapore as an established international financial hub and add to the reputation of SGX as being an international multi-asset exchange," Mr Tham said.

He noted that companies that are private equity or venture capital backed will likely benefit the most as Spacs can negotiate more certain pricing, compared to traditional IPOs, where prices are generally subject to the market at that point of time.

Ravi Thakran, founder and chairman of Singapore-based private equity fund, Turmeric Capital, told BT the idea of Spacs could absolutely work in Singapore.

Mr Thakran, who is the former group chairman of LVMH South and South-east Asia, Australia and New Zealand, raised over US$200 million in a Spac - Aspirational Consumer Lifestyle Corp - on the New York Stock Exchange last September.

"We would welcome this move by the SGX," he said. "We have done one Spac in the US, and we might do more going forward in the US, but we would be very keen if this play started here."

Mr Thakran noted that the advantage of a Spac is about efficiency of bringing companies to the public market, adding that he believes there are a few thousand companies in Asia that should be public.

"Spacs can provide them a real route to the market, and I think Singapore should certainly have a meaningful share of this market," he added.

According to Mr Tham, a potential concern may be the quality of companies to be acquired by Spacs, but this can be mitigated by having rules that stipulate that such acquired companies should also meet the listing requirements of the exchange.

SGX RegCo's Mr Tan said: "Since 2010, we have had the benefit and experience of observing other jurisdictions that have listed Spacs."

He noted that some Spacs are more successful than others.

"We will examine carefully the hallmarks of success and how we can encourage this structurally," Mr Tan said. "It is possible that we will have a public consultation as early as this quarter."