Singapore Exchange to Allow SPAC Listings on the Mainboard

Singapore Exchange (SGX) announced it will allow Special Purpose Acquisition Companies (SPACs) to list on the Mainboard, starting from September 3.

SPACs Provide Alternative Route to Listing

SPACs are a rising trend in the biotech industry. These companies would first go through the process of initial public offering (IPO) and gain funding with the sole purpose of acquiring a private company within a 2-year time limit. If SPACs failed to make it, fundings would be returned to investors.

The great thing about SPACs is that they provide a different way to go public and raise capital, and investors can have the chance to invest in promising private firms. A firm that merges with a SPAC takes its place on the listing, meaning it could go public without filing lengthy paperwork for a traditional IPO.

“SGX’s SPAC framework will give companies an alternative capital fundraising route with greater certainty on price and execution. We want the SPAC process to result in good target companies listed on SGX, providing investors with more choice and opportunities,” said Tan Boon Gin, CEO of Singapore Exchange Regulation.

SGX’s Criteria for SPACs

SPACs would have to meet certain criteria to be listed on the SGX. For starters, their market capitalization should be over $1.11 million (150 million Singapore dollars). Then, SPACs have to complete the acquisition of a private firm in 24 months with an extension of up to 12 months, which is subject to the fulfillment of prescribed conditions.

What’s more, sponsors must subscribe to at least 2.5% to 3.5% of the IPO shares depending on the market capitalization of the SPAC, and so on.

Currently, the U.S. is the biggest battlefield for SPACs. It has drawn around 420 SPACs in the first 8 months of 2021. In Asia, South Korea and Malaysia have already allowed SPACs listing, but they allow 36 months for SPACs to finish acquisition compared to the 24-month rule in the US.

Author

Tyler Chen

"Never go to a doctor whose office plants have died."- Erma Bombeck