(Bloomberg) -- Two special purpose acquisition companies are set to start trading in Singapore this week, in a test of an alternative to the U.S. for the increasingly popular vehicles. The challenge now for the city-state is to attract others and cement its position as one of the earliest Asian markets to embrace SPACs.
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Singapore-domiciled companies raised a record $1.3 billion in U.S. initial public offerings in 2021, more than the $1 billion raised in the local exchange, with blank-check firms making up the bulk of the amount in New York amid the allure of heightened valuations. After Singapore’s September rollout of its SPAC framework, the exchange could become one of the chosen venues for those chasing acquisitions across Asia.
“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,” said Johnson Chui, co-head of APAC equity capital markets at Credit Suisse Group AG. “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.”
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 that city also rolled out a framework last month.
Of the seven Singaporean companies that listed in New York last year, five were SPACs, with proceeds from those special IPOs ranging from $86 million to $287 million. L Catterton Asia Acquisition Corp., the biggest among the group, is now said to be in talks to merge with Carousell Pte., an online marketplace operator that’s also based in the city-state.
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Despite the increased scrutiny of such listings globally -- which tainted sentiment against the category -- four of the Singaporean-based SPACs in New York that debuted last year still trade above their listing price, while the L Catterton-backed class A shares are down 1.1% since they debuted in May.
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.
“In determining an appropriate SPAC listing venue, sponsors would consider factors including the SPAC’s target universe for business combinations,” said Ho Cheun-Hon, head of Southeast Asia equity capital markets at Credit Suisse. “The industry sector, geographical footprint, size and financial profile of the De-SPAC targets might suit certain stock exchanges more than others.”
(Adds IPO proceeds raised in Singapore last year to second paragraph.)
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