Vertex Tech starts trading on Jan 20 in Singapore's first SPAC listing

VERTEX Technology Acquisition Corporation (VTAC), a special purpose acquisition company (SPAC) established by Vertex Venture Holdings (Vertex Holdings), has registered its final prospectus with the Monetary Authority of Singapore. (see Amendment note)

VTAC is issuing 11.8 million units at an offer price of S$5 apiece, as stated previously in its preliminary prospectus.

This offering will open at 8 pm on Thursday (Jan 13) and close at 12 pm on Jan 18. The trading of the units on the Singapore Exchange will then commence on a "ready" basis at 2 pm on Jan 20, sponsor Vertex Holdings said in a press statement on Thursday. 

The venture capital firm is backed by Singapore’s investment company Temasek.

Of the 11.8 million units, 11.2 million are being offered via an international placement. This includes institutional and other investors in Singapore, as well as foreign institutional and selected investors outside the United States.

There will also be a public offering of 600,000 units in Singapore. The success of the cornerstone tranche resulted in most of the shares already placed out before the prospectus was lodged, reducing the retail tranche to about 5 per cent of the total offering. 

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"Fortunate or unfortunate, we were very successful in the cornerstone that we reduced the remaining amount," said Chua Kee Lock, non-executive chairman, VTAC.

Each unit comprises 1 share and 0.3 of a warrant per share, which will be issued at the completion of the offering. An additional right to 0.2 of a warrant per share will only be issued at a later time to holders of shares which have not been tendered for redemption at or around the completion of the initial business combination.

The shares and warrants comprising the units will start trading as separate counters at 9 am on the 45th day from the listing date - Mar 7.

VTAC will be focused on looking for a target business in one of six sectors:

• Artificial Intelligence
• Cyber Security and enterprise Solutions
• Consumer Internet and technologies 
• Financial technologies
• Autonomous driving and new-energy vehicles
• Biomedical technologies and digital healthcare

"Ultimately the most important factor is that it is easily understood by the market, but I will say one thing for sure, likely not to include biotech companies. It is very hard for this market to understand biotechnology," said Chua.

Potential target businesses will be weighed against six criteria according to Jiang Honghui, chief executive officer of VTAC. The criteria being:

• Technology driven
• Fast growing and scalable business model
• At an inflection point of their growth journey
• Strong management team
• Cross border potential

"All the companies that we will be potentially targetting, they will already have a proven product, a proven business model, they will be growing. However we are hoping that with this additional injection of cash through the business combination and also with the support of Vertex as a whole network it can grow even faster to have a higher growth trajectory," said Jiang. 

Chua reiterated the layers of checks and balances between the independently run funds and the sponsor Vertex Holdings should a portfolio company be a business target. From the outside investors of the fund to the board of the portfolio company, the acquisition will have to make sense to the different groups of people. Vertex Holdings has five different funds, Vertex USA, Vertex Israel, Vertex Ventures Southeast Asia & India, Vertex Ventures China and Vertex Growth.

"So there's multilayer of controls. Notwithstanding this, we will probably be looking at a combination of some non-Vertex portfolio and some of the Vertex portfolio," said Chua.

VTAC's incentives aimed at encouraging a long term view, with the allotment of 10 million shares after completion of the initial business combination, or promote shares linked to time-based and price-based vesting conditions. After 12 months of the initial business completion, 49 per cent of the promote shares will be vested for the sponsor, with 17 per cent upon shareholders return exceeding 20 per cent or at S$6 share price, 40 per cent or S$7 share price and 60 per cent or S$8 share price. There is a strong emphasis on continuing to grow the business beyond the initial combination. 

"We have spent time thinking about the structure incentivising and getting people to focus on business combination and stay with the company after business combination," said Chua.

Vertex believes that its knowledge, global network and contacts will set itself apart from other SPAC sponsors, coupled with its exits and investment track record with its portfolio companies. Exit examples raised by Vertex includes Nasdaq-listed cybersecurity company CyberArk, whose share price has risen 432 per cent to US$158.55 from its IPO price of US$16.

"We believe that we have a good understanding where are high growth areas, where are the disruptive and innovative areas, where are the truly innovative business models, where are the companies and how to assess those businesses," said Chua.

READ MORE:

• Vertex Technology lodges preliminary prospectus for S$200m SPAC
• Singapore SPAC Vertex Technology set for local listing on Jan 21
• Temasek-backed Vertex wins nod for SPAC listing on SGX

Amendment note: An earlier version of this article stated that the sponsor was Vertex Venture. The story has been updated for clarity to say that the sponsor is Vertex Holdings.