Singapore exchange eases rules for SPAC listings

The Singapore Exchange (SGX) released a set of new rules to that eased the restrictions on special purpose acquisition companies (SPACs) to list on the bourse. It will come into effect from September 3.

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These rules are said to be more liberalized than the exchanged had proposed initially in March. For instance, entities are required to have a minimum market capitalization of S$150 million (US$112 million), half of what the bourse had proposed earlier.

SPACs are blank check companies or shell entities that raise money through the public markets to eventually acquire or merge with a company, preferably a startup. This enables the startup to go public in a much shorter time than the traditional IPO route.

The SGX also said that the De-SPAC, when a SPAC has merged with a company, must happen within 24 months of the initial public offering (IPO) along with an extension of up to 12 months subject to fulfilment of prescribed conditions, according to the new rules.

The exchange said it would work with the local investors association to increase awareness about SPACs. It added it would also partner with the Singapore Institute of Directors to educate future directors of SPACs on the responsibilities and duties expected of them.

“We want the SPAC process to result in good target companies listed on SGX, providing investors with more choice and opportunities. 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’ interest,” said Tan Boon Gin, CEO of SGX Regulation (SGX RegCo) in a statement.

Singapore-based digital tech unicorn Grab is one of the popular firms to take this route and merge with the SPAC Altimeter Growth in a US$4 billion deal to list on the US exchange Nasdaq. Following this several other startups in the region such as Traveloka, Bukalapak, and Tokopedia have shared their interest of taking this route to list on the US exchange.

Nikkei Asia reports that the SGX hasn’t been able to attract some of the high-profile IPOs. It highlights that Southeast Asian companies such as Sea and Razer chose to list elsewhere. The exchange recorded a 20.5% decline in earnings in the six months of this year that ended June, compared to a year ago.

According to a Bloomberg report, firms have globally raised nearly US$130 billion this year alone through SPACs. The report further pointed out that the pace of SPAC-based listings has slowed down of late owing to increased scrutiny by the US Securities and Exchange Commission, which is seeking more disclosures from the entities.

Currency converted from Singapore dollar to US dollar: US$1 = S$1.34