Singapore, seeking to revive its lacklustre fundraising market, is pulling out all the stops to emerge as a key listing venue for smaller sized blank-check companies as a firm backed by state investor Temasek debuts on Thursday.
This comes four months after Singapore Exchange allowed special purpose acquisition companies (SPACs) to list, easing proposed rules in response to market feedback.
The inaugural listing of Vertex Venture's Singapore SPAC also marks the first major debut of such structures in Asia since the frenzy seen in the United States in early 2021 prior to regulatory changes there.
"The point is to attract high-growth technology companies which conventionally would not have considered this market and now they have sponsors who can take over the risk also," said Chua Kee Lock, CEO of Vertex Venture, a Temasek subsidiary.
SPACs raise money in public offerings, put it in a trust and then aim to merge with a private company and take it public, typically offering shorter listing timeframes and strong valuations.
With an eye on sectors such as cyber security and fintech, Vertex Technology Acquisition Corp raised S$200 million ($148 million), with 13 cornerstone investors such as Temasek-linked entities and a fund operated by Dymon Asia, contributing 55%.
Vertex Venture, the SPAC's sponsor, manages $5.1 billion of assets with a portfolio of more than 200 companies, and has up to two years to find a target. The IPO was heavily over-subscribed, Vertex said on Wednesday.
Another SPAC, Pegasus Asia, backed by European asset manager Tikehau Capital and a holding firm of LVMH's chairman, among others, raised S$150 million and plans to invest in tech-enabled sectors. It lists on Friday.
A S$150 million SPAC sponsored by Southeast Asian industrial and technology buyout fund Novo Tellus Capital Partners, got investment from a Temasek unit and others. It lists next week.
Southeast Asia, home to fast-growing Indonesia and Vietnam, is seeing a boom in dealmaking as investors bet on post-pandemic technology plays in a region of 650 million people.
SGX is offering a regulatory framework similar to that in the United States, including allowing participation of retail investors but has mandated that sponsors should also invest in their SPAC.
Analysts say risks include SPACs overvaluing companies and not finding ideal targets.
'HERE TO STAY'
"While there will always be gyrations in the market, we believe the SPAC framework is here to stay and complements the traditional IPO route," Mohamed Nasser Ismail, head of equity capital markets at SGX, told Reuters.
By focusing on the track record of sponsors, ensuring their compulsory investment in SPACs and maintaining due diligence and disclosures in listed SPACS similar to that of typical IPOs, he said SGX was hopeful of the outlook for SPAC listings.
While considered one of Asia's leading financial and business hubs, Singapore has not captured big IPOs. Last year, fundraising on SGX halved to $565 million, a six-year low, with just eight listings, Refinitiv data shows.
Hong Kong, home to large Chinese listings, is also allowing SPAC listings from this year but bars participation from retail investors.
Eng-Kwok Seat Moey, DBS' head of capital markets, said SPACs are being accepted by many investors as an alternative to gain access to start-ups which typically tap private equity markets.
"Several Singaporean and regional companies in high-growth, high-tech sectors will be mature for listing on public markets in the coming years," she said, adding that these would emerge as business combination targets for SPACs listed on SGX.
Credit Suisse and DBS are the joint issue managers on the Vertex SPAC, and joint global coordinators, with Morgan Stanley.