From Friday (Sept 3), the Singapore Exchange (SGX) will allow companies to list in Singapore via a special purpose acquisition company (SPAC) framework.
The guidelines are under a more liberal rule book than initially proposed by the exchange. For one, a minimum market capitalisation of S$150 million (US$112 million), half of the amount SGX proposed earlier, according to a statement from SGX on Thursday. Certain limits on warrants and share redemption have been removed too.
SPACs, also known as “blank cheque companies” have been around since the 1990s. They recently gained popularity due to the favourable framework that benefits many companies and investors – like a faster timeline to go public and raise funds.
SPACs raise money from investors and then look to acquire another business, usually a private one, within a designated time frame.
SGX’s CEO Loh Boon Chye had earlier set the target for the exchange to list its first SPAC this year.
Competitive SPAC market
SGX is the latest of a string of global financial markets who have open up to SPAC listings over the past year. Popular SPAC markets are in the US, including Nasdaq.
The relaxed rules come after market feedback. The exchange had proposed tighter restrictions than the US, as it wanted to raise safeguards to protect investors while it boosts the local IPO market.
The move puts Singapore one step ahead of Asian rival Hong Kong. This year, companies worldwide have raised in total US$130 billiion via SPACs, Bloomberg data showed.
Luring local tech firms back to list here
For years Singapore has struggled to attract high-profile tech players for IPOs. Southeast Asia’s popular tech firms like Sea Ltd and gaming hardware maker Razer have opted for listings anywhere but their home country.
The latest move might see more local-based tech unicorns list in Singapore.
The SPAC offering can provide SGX the much needed visibility to attract companies that are ripe for listing, amid a competitive global public market.
Last year, more than 165 global SPAC firms were listed, five times more than in 2015.
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