Singapore state investment firm Temasek Holdings says it sees heightened interest among Southeast Asian companies to list via a special purpose acquisition company (SPAC), adding that some of its portfolio firms are looking at taking advantage of the option.
In a virtual press conference following its 2021 review, Temasek International’s joint head for telecommunications, media & technology and joint North America head Mukul Chawla said the state investor is open to its companies exploring the SPAC route.
“It has been an active year [2020-21] for a number of our companies to access the public markets, as the trends accelerated by the pandemic have presented interesting opportunities for these companies to strengthen their balance sheets. SPACs or otherwise, we encourage our companies to look at all sources of capital,” he added.
Temasek International’s managing director for investments in telecommunications, media & technology and in Southeast Asia, Fock Wai Hoong, said although Temasek would be happy to provide its views, it is up to the companies to opt for a SPAC listing or other capital raising methodologies.
The venture capital investment holding company Vertex Holdings, an arm of Temasek, is said to be planning to raise funds for dealmaking by listing a SPAC on the SGX. Bloomberg reported last week that the company is working with advisors on the potential SPAC offering, although details of the transaction have not been finalised.
Previously, it was reported that Grab has attracted backing from Temasek, among other prominent global investors, for its planned merger with a SPAC backed by Altimeter Capital Management. The deal, which would value Grab at approximately $39.6 billion, is expected to be completed by year-end.
Temasek’s wholly-owned arm Vertex Ventures was ride-hailing and delivery giant Grab’s first institutional investor and had injected $10 million in the company’s Series A funding.
In late June, Temasek-backed online payment firm Payoneer listed on Nasdaq after combining with a SPAC, FTAC Olympus Acquisition Corp. After the listing, Temasek owns 20.4 million shares in Payoneer, or around 5.98% stake, according to a US regulatory filing.
Responding to a question about tech valuations, Chawla said Temasek conducts bottom-up intrinsic value tests for each of its investments, with expected returns evaluated against a risk-adjusted cost of capital. While valuation is included in the exercise, the companies will be evaluated by other measures as well, such as its growth prospects.
“There are many technologies that are very early in their evolution, such as autonomous driving, robotics, AI, and blockchain. When we look at the path forward for these technologies and the valuation on a growth-adjusted basis.
“It is true that some of these technologies are highly valued and some are not. The runway is very long for digitalisation-aligned opportunities, and some are still at extremely early stages. We believe there will be ample opportunity for us to find interesting things to do [within these technology areas],” said Chawla.
Seeing blockchain and AI as areas of long-term trends that would impact multiple industries and geographies, Temasek had set up new groups, dubbed as pods, to explore the opportunities in the two areas. After a year of incubation, its blockchain pod founded LemmaTree, a group of blockchain companies that uses decentralised technologies to empower individuals and organisations.
Its AI pod, on the other hand, founded a centre of excellence to build deep expertise in AI. The centre works with its portfolio companies to deliver better commercial outcomes and develop new business opportunities.
As of March 31, Temasek had a net portfolio value of S$381 billion.