Singapore Stock Exchange is looking to establish itself as the regional hub for blank cheque companies riding on regulatory overhaul, support by state firms and a tech boom in its back yard.
The bourse is encouraged by the flurry of Southeast Asian tech start-ups seeking funding. It revised rules and expected to list dozen special purpose acquisition companies (SPACs) within the next 12-18 months, bankers, venture capitalists and analysts say.
A key test for SGX will come when such companies, also known as blank-cheque or shell firms, have to seal merger targets within two years, a “de-SPACing” process already weighing on U.S. deals as hundreds of SPACS chase targets, as reported by Reuters.
According to Reuters, Singapore faces a challenge to get its traditionally risk-averse investors to be interested in a new asset class. The issue is more prominent after SGX earlier had limited success to ramp up its equity market.
In contrast, large international institutions have turned to Hong Kong for blockbuster equity listings over the past decade.
“Looking at the response for the first SPACs, the pipeline is very strong,” said Eng-Kwok Seat Moey, capital markets head at DBS, joint issue manager on two SPAC IPOs with Credit Suisse.
Singapore SPACs are likely to chase targets in fintech, tech and consumer sectors, bankers say. Valuations of targets could range between S$800 million ($596 million) to up to S$2 billion, with dealmaking likely as early as this year.
“The size of the opportunity, of younger companies scaling up and going for listings, is several times what it was many years ago and over the next decade it’ll be multiples of those,” said Ashish Wadhwani, a Singapore-based managing partner at IvyCap Ventures, an Indian firm managing about $400 million of assets.
