SPAC boom to bust: SGX’s experiment one year on

It has been said that good things come in threes.

In January 2022, three special purpose acquisition companies listed on the Singapore Exchange (SGX) within a week of each other, raising a combined total of around US$385 million. These were the first SPACs to list under SGX’s SPAC listing framework, which opened the door to these kinds of listings on its mainboard exchange. So far, none have made any acquisitions.

The bourse’s framework for SPACs was announced in September 2021, toward the tail end of a SPAC frenzy in the US. The year 2021 began with “explosive growth” in new listings but was followed by “a rapid cool-off in the second half of the year.”

Grab, arguably Southeast Asia’s hottest tech name at the time, went public via a SPAC on the Nasdaq.

Amid these high expectations, SGX was reported to be betting on such listings to “capture [the region’s] tech boom.”

Some market participants even predicted that Singapore could list up to a dozen SPACs in the 12 to 18 months that followed the initial three listings.

See also: As SPACs target Tokopedia and Traveloka, here’s what you need to know

SPAC boom to bust

Unfortunately, that optimistic start has proved to be a false dawn: No new SPACs have followed in the footsteps of those initial three listings.

“The world has changed quite dramatically since then,” Mohamed Nasser Ismail, global head of Equity Capital Markets at SGX Group tells Tech in Asia, adding that “the market was vibrant when those expectations [of a dozen SPACs listing] were expressed.”

In the past year, markets have been whiplashed by macroeconomic concerns, including rising interest rates and Russia’s invasion of Ukraine.

Nasser notes that this has caused markets to “take a step back,” affecting both SPACs as well as IPOs and putting them “on pause” globally.

With “some IPO activities returning,” Nasser expects to see a stronger recovery in the latter half of the year.

Do green shoots in the IPO market imply a revival in the SPAC market, though?

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