Blank Check Firms in Singapore Test Alternative Option to U.S.

(Bloomberg) — Two special purpose acquisition companies are set to start trading in Singapore this week. The challenge now for the city-state is to attract others that might still be considering going to the U.S market.

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Singapore-domiciled companies raised a record $1.3 billion in initial public offerings stateside in 2021, more proceeds than in the local exchange, with blank-check firms making up the bulk of that amount amid the allure of heightened valuations. After Singapore’s September rollout of its SPAC framework, the exchange could become the chosen venue for those chasing acquisitions across Asia, according to bankers.

“In determining an appropriate SPAC listing venue, sponsors would consider factors including the SPAC’s target universe for business combinations (ie de-SPACs), and which stock exchanges are suitable long-term listing venues for such targets,” said Ho Cheun-Hon, head of Southeast Asia equity capital markets at Credit Suisse Group AG. “The industry sector, geographical footprint, size and financial profile of the De-SPAC targets might suit certain stock exchanges more than others.”

Of the seven Singaporean companies that listed in New York last year, five were SPACs, with the ticket per IPO ranging from $86 million to $287 million. L Catterton Asia Acquisition Corp., the biggest of them based in Singapore, is now said to be in talks to merge with Carousell Pte, an online classifieds marketplace operator that is also based in the city-state.

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Despite the increased scrutiny of such listings globally, which tainted sentiment towards the category, four of the Singaporean-based SPACs in New York that debuted last year are trading above their listing price, while the L Catterton-backed class A shares are down 1.1% since they debuted in May.

The blank check firms going public in Singapore have two years to complete an acquisition, subject to a 12-month extension. The financial hub will be competing with Hong Kong to attract SPAC listings this year, after the city also rolled out a framework last month.

Vertex Technology Acquisition Corporation Ltd., set to start trading on Thursday after raising S$170 million ($126 million), is targeting acquisitions in technology areas ranging from cyber-security to new energy vehicles and biomedicine. Tikehau-backed Pegasus Asia is set to debut on Friday following a S$150 million IPO. Pegasus, will target consumer tech, fintech, property tech, health tech and other sectors, primarily in Asia.

Novo Tellus Alpha Acquisition, which is expected to debut on Jan. 27, is focusing on investments in the Indo-Pacific region.

“It is a good development for the capital markets in Asia that both the Hong Kong and Singapore exchanges have announced their regime for SPACs. That creates listing venue options for issuers apart from the U.S,” said Johnson Chui, co-head of APAC equity capital markets at Credit Suisse. “We feel there will be a lower number of SPACs in Asia, but their quality will be higher with targets more relevant for the respective local exchanges.”

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