Singapore to let blank cheque companies raise funds starting on September 3, beating Hong Kong to the punch with SPACs

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Singapore said on Thursday that it would allow special purpose acquisition companies (SPACs) to go public on its bourse starting Friday, as the city state hopes to become the go-to market in Asia for what has been one of the hottest fundraising trends globally in the past 18 months.

The so-called blank-cheque companies have raised more than US$122 billion this year alone, primarily through listings in the United States. However, they have proven to be popular with Asian sponsors and target companies, prompting a race between Hong Kong and Singapore to see who would be the first to offer listings for these investment vehicles.

“We want the SPAC process to result in good target companies listed on SGX [Singapore Exchange], providing investors with more choice and opportunities,” Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo), said in an announcement on Thursday. “To achieve this, you can expect us to focus on the sponsors’ quality and track record. We have also introduced requirements that increase sponsors’ skin in the game and their alignment with shareholders’ interests.”

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SGX RegCo is a unit of the city’s bourse operator.

The new rules come more than a decade after Singapore first considered greenlighting SPAC initial public offerings, but shelved the plan following a public consultation. High-profile collapses in Malaysia and South Korea, as well as regulatory concerns about protecting retail investors, have slowed the acceptance of SPAC listings in Asia in the past.

These takeover vehicles do not have any existing businesses, but are created purely to raise financial war chests and buy assets within a specified period of time, usually 18 months to two years.

Following a new consultation this spring, SGX RegCo said SPACs would be required to have a minimum market capitalisation of S$150 million (US$112 million) and would only be able to list on SGX’s main board. That is lower than the minimum market cap of S$300 million proposed in April and more in line with thresholds for listings on the New York Stock Exchange or Nasdaq.

SPACs would also be required to reach a deal within two years, with the option of extending that period by another 12 months under certain conditions. Sponsors would have to hold their shares for at least six months following a deal and subscribe to at least 2.5 per cent of the IPO shares or warrants.

Acquisitions would need approval from more than half of SPACs’ independent directors and more than half of the shareholders to proceed.

Financial Secretary Paul Chan Mo-po called for the SFC and HKEX to explore suitable listings for SPACs in March. Photo: Sam Tsang
Financial Secretary Paul Chan Mo-po called for the SFC and HKEX to explore suitable listings for SPACs in March. Photo: Sam Tsang

Hong Kong Financial Secretary Paul Chan Mo-po said in early March that he had instructed the Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing (HKEX) to explore suitable listing regimes for SPACs to ensure the competitiveness of the city’s financial markets while continuing to safeguard the investing public. However, little has been said publicly about Hong Kong’s plans since his comments.

The move by Singapore comes as several high-profile Southeast Asian technology unicorns have opted to go public via US-listed SPACs.

Grab Holdings, the Singapore-based ride-hailing, food delivery and financial services super app, agreed in April to go public via a SPAC backed by Silicon Valley’s Altimeter Capital Management in a deal that would value Grab at US$39.6 billion.

Grab Holdings is going public in the US via SPAC, while Gojek is considering a potential listing via a SPAC after its merger with Tokopedia. Photo: Shutterstock
Grab Holdings is going public in the US via SPAC, while Gojek is considering a potential listing via a SPAC after its merger with Tokopedia. Photo: Shutterstock

A blank-cheque company backed by Hong Kong billionaire Richard Li Tzar-kai and billionaire technology investor Peter Thiel agreed in July to acquire Singapore’s PropertyGuru Group in a deal that values Southeast Asia’s biggest property technology company at about US$1.8 billion.

At the same time, GoTo Group, the company formed by the US$18 billion merger of Indonesian unicorns Gojek and Tokopedia in May, is exploring both a traditional listing in Indonesia and going public in the US, possibly through a SPAC.

SPACs raised more than US$95 billion in the first quarter, but fundraising has slowed in recent months after the US Securities and Exchange Commission raised questions about accounting for stock warrants common to the deals, according to financial data provider Refinitiv.

August was the second slowest month for fundraising by blank-cheque companies since June 2020, with just US$4.7 billion raised, according to Refinitiv.

After the blistering pace of fundraising, investors have become more selective, making it more difficult to secure private investment in public equity (PIPE) financing to complete mergers between SPACs and private companies.

However, SPAC sponsors and target companies in Asia remain keen on these investment vehicles, as shown by the recent deals for Tim Hortons China and the American publisher of Forbes magazine.

“Having SPACs listed in Asia – whether it is in Hong Kong or Singapore – would actually be a good thing,” Jonathan Lin, CEO of Magnum Opus Acquisition, a Hong Kong-based SPAC behind the Forbes deal, said in an interview this week. “You give an avenue for some of these companies that have historically gone to the US, but you create new opportunities for them out here. That’s better for everyone.”

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