Seven companies that SPACs could target

Singapore

ELIGIBLE companies in South-east Asia are fielding a frenzy of offers from blank-cheque vehicles listed in the US, as sponsors look towards the region to deploy capital before their two-year deadline.

There is "heavy oversubscription" for special purpose acquisition companies (SPACs) targeting South-east Asia, Udhay Furtado, managing director and co-head of Asia equity capital markets at Citi, told The Business Times.

The investor community is expecting more high-growth, consumer-focused technology companies like New York-listed Sea to emerge from the region, he said.

The SPAC boom could provide a timely exit for early-stage venture capital firms that face mounting pressure to show returns to investors. As the tech ecosystem matures, more companies here are increasingly becoming attractive SPAC targets.

As a rule of thumb, potential target companies include those valued at US$1 billion or more, and have a high-growth potential, industry payers said. Some noted that eligible companies should have a sizeable revenue stream - around US$100 million - and ideally be profitable or are close to turning a net profit within the next year or two.

Other investors said they could also consider tech companies with a valuation of US$500-600 million, and have the potential to hit unicorn status in the next two years.

Patrick Grove, chief executive of Catcha Investment, a SPAC targeting the South-east Asian market, noted that it is also possible that sponsors are looking at merging smaller, similar companies to form an entity big enough for a SPAC deal.

Companies including Bukalapak, Gojek, Tokopedia and PropertyGuru are reportedly already eyeing SPAC listings in the US.

BT explores some new potential targets, and why they would or would not make sense.

JustCo

The homegrown co-working operator - valued at US$1 billion - has been cautiously pursuing growth despite the pandemic, and industry players told BT that several sponsors have approached the GIC-backed company to list via a SPAC.

CEO Kong Wan Sing told BT last year that JustCo Holdings' regulatory filings for FY2019 - which show a net loss of US$30.6 million on the back of a US$40.3 million topline - are not fully reflective of the group. He added that the firm has turned profitable in Singapore, and is "looking to be very profitable" as a group.

Ninja Van

The Singapore-based courier could be an attractive SPAC target, considering its growth is potentially in sync with the booming e-commerce trend, said observers.

The logistics company is said to have a post-money valuation of around US$761 million after its Series D round last year, according to data platform VentureCap Insights.

However, Ninja Van - which is backed by investors such as B Capital, Grab and Monk's Hill Ventures - is still working towards profitability, and the jury is still out on whether the startup can master the complex cost structure of e-commerce logistics.

Trax

The company is said to be pursuing a US listing, which could materialise as soon as this year.

Its latest fund raise, a US$100 million Series D round in July 2019, pegged the startup to be reportedly worth around US$1.2 billion to US$1.3 billion. The valuation sits comfortably in the range SPAC sponsors are looking out for.

But the Singapore-based retail technology and computer vision company is said to be eyeing the more traditional initial public offering (IPO) route instead.

M-DAQ

The Singapore-based fintech startup has expressed interest in an IPO as early as 2018. As the fintech scene heats up, it seems like the time is almost ripe for the Alibaba-backed firm to pursue a listing, making it a prime target.

The company is already profitable, and has a valuation of US$500 million, according to reports.

FinAccel

The parent company of digital credit platform Kredivo has a post-money valuation of US$455.7 million after completing its Series C round in 2019, according to VentureCap Insights.

Although this is still below the US$1 billion mark, observers are optimistic about the growth potential of the startup. This is especially as the digital lending market in South-east Asia's crown jewel, Indonesia, continues to evolve and grow. Observers reckon that the company is fielding offers from some sponsors, but it still could be a while before this materialises.

Ovo

One of the few unicorns in South-east Asia, Indonesia-based Ovo stands out not only because of its reported US$2.9 billion valuation, but also because it is backed by heavyweights Grab and Tokopedia.

The company, which is riding the fintech high, is in the sweet spot for a merger with a blank-cheque vehicles, said observers.

VNG

Vietnamese tech company VNG, which specialises in digital content and online entertainment, in 2017 signed an agreement with the Nasdaq to explore a public listing.

Although the listing has not yet materialised, sponsors are unlikely to pass up the opportunity to offer the only unicorn in Vietnam - one of South-east Asia's fastest growing economies - a seat at the SPAC table.

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