Singapore’s first blank-cheque listings get off to a timid start, raising question whether the buzz around SPACs is fizzling out
- Vertex Technology Acquisition jumped in early trade on Thursday, but was just 1 per cent higher than its offer price by the end of Friday
- Pegasus Asia rose 0.4 per cent in its first day of trading on Friday
A lacklustre market debut for the first two blank-cheque companies to list in Singapore is raising some questions whether the excitement seen for such vehicles in the US early last year will prevail in Asia.
Vertex Technology Acquisition, sponsored by a unit of state investor Temasek, jumped in early trade on Thursday, but was just 1 per cent higher than its offer price by the end of Friday. Tikehau Capital SCA-backed Pegasus Asia rose 0.4 per cent in its first day of trading on Friday.
The muted performance of the two SPACs comes amid a global equity sell-off. Worries over rising inflation and potential rate hikes by the Federal Reserve saw the technology-focused Nasdaq 100 plunge into a correction on Thursday. SPACs’ performance tends to be correlated to tech shares.
“There is no real reason for a SPAC to trade very far from its listing price” until it’s ready to find merger partners, said Sumeet Singh, the head of equity research, IPOs and placements at Aequitas Research who publishes at Smartkarma. If the managers are able to undertake a merger that trades well post-market, investors would be willing to “pay a premium and bid the shares higher,” he said.
Both VTAC and Pegasus counted on well-known sponsors and had strong participation of cornerstone and institutional funds, with just small portions reserved for individuals. That could leave some room for those that couldn’t join the IPOs to buy them in the market.