Singapore to let blank cheque companies raise funds starting on September 3, beating Hong Kong to the punch with SPACs
- Blank-cheque companies will be required to have a market cap of US$112 million, while sponsors will have to hold shares for longer
- Hong Kong’s stock exchange also considering rule changes to allow SPACs to list
The so-called blank-cheque companies have raised more than US$122 billion this year alone, primarily through listings in the United States. However, they have proven to be popular with Asian sponsors and target companies, prompting a race between Hong Kong and Singapore to see who would be the first to offer listings for these investment vehicles.
“We want the SPAC process to result in good target companies listed on SGX [Singapore Exchange], providing investors with more choice and opportunities,” Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo), said in an announcement on Thursday. “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’ interests.”
SGX RegCo is a unit of the city’s bourse operator.
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SPACs would also be required to reach a deal within two years, with the option of extending that period by another 12 months under certain conditions. Sponsors would have to hold their shares for at least six months following a deal and subscribe to at least 2.5 per cent of the IPO shares or warrants.
Acquisitions would need approval from more than half of SPACs’ independent directors and more than half of the shareholders to proceed.
The move by Singapore comes as several high-profile Southeast Asian technology unicorns have opted to go public via US-listed SPACs.
SPACs raised more than US$95 billion in the first quarter, but fundraising has slowed in recent months after the US Securities and Exchange Commission raised questions about accounting for stock warrants common to the deals, according to financial data provider Refinitiv.
August was the second slowest month for fundraising by blank-cheque companies since June 2020, with just US$4.7 billion raised, according to Refinitiv.
After the blistering pace of fundraising, investors have become more selective, making it more difficult to secure private investment in public equity (PIPE) financing to complete mergers between SPACs and private companies.