The Singapore Exchange (SGX) is said to be seeking an “anchor investor” for an upcoming pipeline of Special Purpose Acquisition Companies (SPACs) as a way to build momentum for the asset class on the bourse.
Several sources close to the development told DealStreetAsia that Temasek Holdings will likely be roped in for this move that will see the Singapore state investor inject money directly into SPACs listed on the exchange. The SGX is understood to have plans to announce this as soon as the anchor investor and funds have been fully secured.
One source estimated that roughly 10 SPACs may be “activated” in this pipeline, which could mean that nearly S$600 million will need to be leveraged if these SPACs were to list at an average of S$200 million per vehicle. Any level of involvement by Temasek or a Singapore government-backed entity will also be seen as a way to boost investor participation due to its status as a global investor, explained sources.
SPAC listings were given the green light by SGX just last week, following months of a market study assessing the viability of the blank cheque vehicle in Singapore. Market stakeholders have so far been receptive to the latest framework that includes a lower SPAC market cap of S$150 million.
While SGX’s SPAC framework has been widely deemed to be commercial-friendly, the question of liquidity still remains for the newly-launched asset class. Industry players tell DealStreetAsia that the issue for SGX isn’t about finding sponsors or target companies but about attracting investors.
“In the US, the hedge funds are the ones most actively involved in trading SPACs. The reality is that you don’t see that in Singapore,” explained one source requesting anonymity.
Other critics add that the SGX is already too late. Nearly 60% of US-listed SPACs in 2021 are trading below $10, according to a CNBC report early this week. Closer to home, Indonesian unicorn Traveloka is said to have suspended talks with Peter Thiel’s Bridgetown Holdings due to waning interest in the SPAC market.
“Singapore Inc” is understood to have thrown its entire weight behind the SGX SPAC, with the likes of Temasek, EDBI and others deeply involved in the months-long setup process.
“To be honest, I was pleasantly surprised by the SGX regulations around SPACs last week. The final outcome has evolved significantly from their first proposal months ago and I’ve found them to be commercial-friendly,” said a separate industry source directly involved in SPAC and IPO deals in Singapore.
A number of potential SPAC sponsors have already begun showing interest.
Earlier this week, Singapore private equity firm Novo Tellus told DealStreetAsia that it is eyeing a S$200 million SGX-listed SPAC by early 2022. Other names said to be considering an SGX SPAC include French alternative asset manager Tikehau Capital, Temasek’s Vertex Holdings and ex-L Catterton executive Ravi Thakran’s Turmeric Capital.
“The market has responded robustly to the release of our SPACs framework. This is heartening as we continue active engagements with potential sponsors drawn by our Asian SPAC for Asian targets model,” said Mohamed Nasser Ismail, Head of Equity Capital Markets at SGX in an email response.
Temasek declined to comment on this story.