SINGAPORE (Reuters) – The Singapore Stock Exchange’s new rules for Special Purpose Acquisition Companies (SPAC) should help it attract regional funds and fast-growing companies, as it seeks to revitalize a market stable for stock quotes, market participants said.
Some of them expect Southeast Asian startups, especially in the tech sector, to profit from SGX becoming the first Asian exchange to allow SPAC listings since the investment frenzy in PSPCs started in the United States last year, although interest is peaking.
SPACs raise funds on the stock markets to buy private companies, providing these companies with a quick and inexpensive way to get listed on the stock exchange.
“As long-term investors in construction companies, we believe this is a useful tool to have in our quiver,” said Loke Wai San, Co-Founder and Managing Director of Novo Tellus Capital Partners, a buyout fund focused on Southeast Asian industrial technologies. .
Loke said Novo Tellus was optimistic about listing a SPAC within six months and had investigated potential targets as part of a so-called SPAC process.
SGX’s rules, which come into effect on Friday, follow a first proposal it released in late March that included stricter rules than US markets.
SGX has now halved the minimum market capitalization of PSPCs to S $ 150 million ($ 112 million) and allowed the warrants to be detachable from the underlying stocks – a move seen as making PSPC investments potentially more attractive.
King & Wood Mallesons attorneys Nick Davies and Laura Luo said the changes would make more target companies eligible for SPAC listings on SGX, and potentially allow SGX PSPCs to provide the capital needed to achieve a “business environment.” ideal market for potential PSPC targets.
SGX shares rose 1% in a larger, weaker market on Friday.
“Companies in the real estate, consumer and infrastructure sectors have traditionally fueled the growth of Singapore’s capital markets,” said Vineet Mishra, Co-Head of Southeast Asia Investment Banking at JPMorgan. “By expanding the product line to include PSPCs, fast-growing companies could have the opportunity to access these markets as well. “
Hindered by a small base of retail investors, SGX has struggled to capture large regional IPOs, but as Southeast Asian startups begin to gain global attention and raise funds to huge valuations, SGX spots an opportunity.
The measures also come as the city-state provides funding and light regulation and establishes itself as a fintech hub.
“The market feedback is very clear that Asian SPACs for Asian targets make a lot of sense as investors here are more familiar with the targets and are in the same time zone,” said Tan Boon Gin, CEO of Singapore. Exchange Regulation.
Across Asia, Hong Kong and Indonesia are studying the PSPC list, while Britain has relaxed the rules here. But PSPCs have lost some of their luster in the United States as regulators cracked down on them.
“We are actively monitoring SPAC sponsors who come to register on SGX,” said Darius Cheung, CEO of real estate portal 99.co, a potential IPO candidate.
($ 1 = 1.3423 Singapore dollars)
Reporting by Anshuman Daga Editing by Sumeet Chatterjee and Mark Potter