With high-value Asian firms currently utilising the NSE for listing SPACs, Singapore's eased rules are likely to be a game-changer for such listings in Asian markets.
Effective from 3rd September 2021, the Singapore Exchange (SGX) has introduced its new Special Purpose Acquisition Companies (SPACs) listing framework.
The framework will increase the competitiveness of the SGX, and the companies listed on it and provide an alternative capital fund raising route for investors.
SGX SPACs Listing Framework
Southeast Asia, and the wider Asia Pacific region, is home to a vibrant ecosystem that has produced decacorns, unicorns and next-generation global new economy companies. Singapore’s new SPACs Listing Framework aims to ensure they remain the frontrunner in the region.
The simplified framework provides a pathway for companies to access the public market and offers an alternative investment product for investors to benefit from the fast-growing Asia economies. The framework takes into consideration the feedback and interests of its market participants, based on their comments the SGX is confident that it has balance issuers' fund-raising needs while safeguarding investors’ interest.
Following a consultation, SGX's regulatory arm has declared eased rules that include halving the minimum capitalisation requirement for SPACs to S$150 million (US$112 million) from its initial proposal. It also said it will now allow warrants to be detachable and all shareholders would have redemption rights.
The SGX SPACs guidelines
A key highlight of the new rules is that sponsors must subscribe to at least 2.5% to 3.5% of the IPO shares/units/warrants depending on the market capitalisation of the SPAC. This is designed to ensure that there is a clear alignment between the sponsors' and shareholders' interest.
Other rules include:
- Minimum market capitalisation of S$150 million (US$112 million)
- De-SPAC must take place within 24 months of IPO with an extension of up to 12 months subject to fulfilment of prescribed conditions
- Moratorium on Sponsors’ shares from IPO to de-SPAC, a 6-month moratorium after de-SPAC and for applicable resulting issuers, a further 6-month moratorium thereafter on 50% of shareholdings.
- De-SPAC can proceed if more than 50% of independent directors approve the transaction and more than 50% of shareholders vote in support of the transaction
- Warrants issued to shareholders will be detachable and maximum percentage dilution to shareholders arising from the conversion of warrants issued at IPO is capped at 50%
- All independent shareholders are entitled to redemption rights
- Sponsors promote limit of up to 20% of issued shares at IPO
Singapore as the Asian hub for SPAC listing
On initial inspection these guidelines for listing SPACs in the city-state already serve to make it the first major Asian market to accept these investment vehicles. This will give SGX an early mover advantage. The SGX clearly expects the new framework to boost listings, noting that it is actively engaging with potential sponsors with the expectation of a robust pipeline of Asian-focused SPACs following the eased rules.
How IQ-EQ can help?
With our unique capabilities and over 50 years of combined experience, IQ-EQ can provide you with a full spectrum of support throughout the SPAC realisation process.
We work with private equity firms, law firms and existing SPAC sponsors. Our team has been involved in a number of major SPAC deals in the US and Europe. This includes our support for Pegasus Europe, where we raised €500 million in a private placement, the largest European SPAC to date.
Talk to us and we’ll build a bespoke process to suit your requirements.