SPAC race heats up in Asia with first Singapore listings due

[HONG KONG/SINGAPORE] Blank-cheque companies are set to make a debut in Singapore this month as the financial hub, which has struggled to attract new stock listings, gears up for competition from Hong Kong.

Vertex Technology Acquisition Corporation, sponsored by state investor Temasek’s Vertex Venture Holdings, is seeking at least S$170 million, while Tikehau Capital SCA-backed Pegasus Asia could raise at least S$150 million. The listings are slated for Jan 21 and Jan 25, respectively.   

The special purpose acquisition companies, or SPACs, come under a framework introduced by Singapore’s exchange in September as bourses globally compete to attract such listings even at a time of growing regulatory scrutiny. Hong Kong released its rulebook last month.  

“There’s been a lot of interest in SPACs in Singapore and investors are generally looking for new asset classes to invest in,” said Stefanie Yuen Thio, joint managing partner at TSMP Law Corp. 

“Having blue chip names like Temasek’s Vertex launch the inaugural SPAC is also good for the market.” 

The listings come after a dry spell for initial public offerings in Singapore, with just about US$1 billion raised from eight deals in 2021. Hong Kong, traditionally the busiest listing venue in Asia, saw a slump in IPOs during the second half of last year as China’s clampdown on several industries including technology made investors uneasy.

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Singapore requires a minimum market capitalisation of S$150 million. Hong Kong’s fund-raising threshold is slightly higher at HK$1 billion (S$174.1 million) and it barred retail investment after past scandals surrounding shell companies.

Hong Kong’s political connection with China and the nation’s recent tough policies against certain new-economy industries “will make Singapore a preferred destination for fundraising,” said Robson Lee, partner at Gibson, Dunn and Crutcher LLP.

Novo Tellus Capital Partners has also received approval to list a blank-cheque company in Singapore, while investment firm Turmeric Capital and internet entrepreneur Patrick Grove are among those exploring listings, Bloomberg News reported earlier.

QUALITY MATTERS

While firms worldwide have raised close to US$172 billion last year via SPACs, Bloomberg-compiled data show, the pace of listings has slowed in recent months with the US Securities and Exchange Commission calling for more disclosures and a recent earnings bust validating some investor concerns over the structures.

The ability of Singapore and Hong Kong “to compete really depends on the quality of companies that we see SPACs bringing to market, and whether they are really differentiated versus what investors can get access to in the US,” said David Smith, a senior investment director for Asian equities at abrdn Asia.

The SPACs set to list in Singapore have 2 years to make an acquisition, with a potential extension of 12 months. Hong Kong also allows 2 years for the de-spac to happen, although it didn’t specify the extension period.

Vertex will focus on investment themes including cybersecurity, artificial intelligence and consumer internet. Pegasus Asia will seek a target in consumer tech, fintech, property tech, health tech and other industries, primarily in Asia.

“I suspect Hong Kong will be a pure-play China market on SPACs and Singapore has the chance to be the ex-US SPAC market,” TSMP Law’s Yuen Thio said.

BLOOMBERG