Vertex, Pegasus SPACs begin trading separately as shares and warrants

THE units of Singapore's first 2 special-purpose acquisition companies (SPACs) have begun trading separately as shares and warrants on the Singapore Exchange (SGX).

Vertex Technology Acquisition Corp (VTAC) and Pegasus Asia went public on the Singapore Exchange on Jan 20 and 21 respectively. Their units had traded until last Friday (Mar 4), before the detachment date on Mar 7.

SPACs are listed as units comprising a share and a fraction of a warrant during their initial public offering (IPO). The share and fractional warrant trade together as a unit for the initial part of a SPAC's life, ahead of detachment, which typically occurs on the 45th calendar day from the listing date.

VTAC units, comprising 1 share and 0.3 of a warrant, closed at S$5.18 on Friday; Pegasus Asia units, comprising 1 share and 0.5 of a warrant, closed at S$4.98. Both units have since been delisted.

Unitholders' accounts were credited with the separated shares and warrants 2 business days after detachment. Shareinvestor data showed trades on the separated shares and warrants commencing on Wednesday.

Shares of VTAC closed at S$4.95 on Wednesday, down 4.4 per cent from Friday's close, when it was still trading as a unit; 22,100 shares changed hands. VTAC's warrants closed at S$0.39 on Wednesday, with 4,350 warrants traded. Shareinvestor data showed the warrants traded between S$0.30 and S$0.39 during the day.

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No trades were recorded for Pegasus Asia's shares or warrants on Wednesday. SGX data showed that investors were bidding at S$4.75 for the shares, with the ask price standing at S$4.95. The bid price for the warrants was S$0.055, with the ask price at S$0.55.

Also known as blank-cheque companies, SPACs are listed cash shells whose purpose is to identify a suitable target company to acquire, taking that target company public in the process.

The founders of a SPAC - known as sponsors - raise capital from investors during the IPO, with most of the proceeds parked in escrow while they seek a suitable target company within a fixed timeframe.

Shareholders will receive their pro-rata portion of the escrow account if the sponsor is unable to find a target and the SPAC liquidates, or if they choose to redeem their shares because they are not in favour of the target.

Redeeming shareholders can still retain their warrants, which could provide upside if the merged entity eventually outperforms.

In the case of VTAC, investors who do not redeem their shares at the point of business combination would be entitled to an additional warrant entitlement of 0.2 per share.

Since SGX introduced its SPAC framework last September, 3 SPACs have gone public, each at an IPO price of S$5 for their units.

Novo Tellus Alpha Acquisition units, comprising 1 share and 0.5 of a warrant, began trading on Jan 27. They will detach the coming Monday. The units closed at S$4.95 on Wednesday, up 1.9 per cent.