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SINGAPORE Singapore’s stock exchange launched new rules this month allowing SPACs to list, a move it hopes will attract more companies to fundraise in the city-state amid an IPO market that has been stagnant for years.
From Friday, special acquisition companies can list on Singapore Exchange (SGX) motherboard.
SPACs, which have become extremely popular in recent times, have no commercial activity and are established solely to raise capital from investors for the purpose of acquiring one or more operating companies. They raise capital from an IPO and use the money to merge with a private company and make it public.
Singapore’s benchmark index has traditionally been dominated by financial and real estate names. But the exchange has set its sights on attracting tech companies and thinks SPACs will be a good way to do it.
Mohamed Nasser Ismail, SGX’s head of equity capital markets, told CNBC on Monday that SPACs provide an alternative route for companies to access public markets.
“There is now a growing pool of new technology or new economy companies emerging in the region that will find the SPACs route in Singapore an attractive, valuable and sustainable way to secure financing going forward,” Nasser told CNBC’s “Squawk Box Asia.”
Companies seeking a SPAC listing on the SGX must meet a minimum market capitalization of 150 million Singapore dollars ($111 million).
The stagnant IPO market in Singapore
SPACs have become extremely popular, especially in the US. There have been 358 SPAC IPOs in the US so far this year, an increase of more than 800% from the previous year. That accounts for the vast majority of 379 SPAC IPOs worldwide so far this year, according to data from consulting firm EY. The rest of the SPAC IPOs were in Europe.
In Asia, according to Reuters, Singapore would be the first exchange to offer the SPAC route.
That could provide a much-needed injection of new enthusiasm for Singapore’s IPO market, which has not attracted much interest from even its own companies, despite the exchange’s efforts to make listing in the city-state attractive.
Singapore-based ride-hailing giant Grab, for example, plans to list on the Nasdaq when the SPAC merger with Altimeter Growth Corp. is completed.
In the first half of this year, Singapore made just three quotes, according to EY data, down 50% from a year ago. By comparison, Hong Kong, which is considered a rival for Singapore’s financial center status, attracted 46 offers in the same period.
The money raised was also much less. Singapore’s three IPOs totaled $200 million in proceeds, while Hong Kong’s 46 offerings raised $27.4 billion.
For businesses, SGX’s Nasser says a SPAC brings “certain benefits that a traditional IPO route may not have.”
“SPACs can provide better certainty in terms of timing, valuation and execution,” he said.
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Sources 2/ https://www.cnbc.com/2021/09/06/spacs-offer-hope-for-reviving-singapores-flagging-ipo-market.html The mention sources can contact us to remove/changing this article |
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