Vertex, Tikehau & Novo Tellus to kick off first wave of SPAC listings on SGX by end-Jan

Singapore Exchange REUTERS/Edgar Su

The Singapore Stock Exchange is preparing for the first set of Special Purpose Acquisition Company (SPAC) listings with three candidates filing their prospectuses within hours of each other.

Vertex Holdings and Tikehau Capital submitted their final documents, while Novo Tellus formally announced its S$150 million SPAC bid in a preliminary prospectus on Thursday. Notwithstanding any delays, SGX is poised to become the first major Asian exchange to host SPAC listings by the end of this month.

Around this time last year, the SGX was still a spectator when the SPAC frenzy was building up in the US, helped by a mix of easy money and charismatic tech evangelists like Chamath Palipathiya, who revived the once ill-favoured backdoor listing route.

By mid-2021, however, US regulators were clamping down on blank cheque entities, demanding transparency and stricter disclosures from SPAC sponsors to protect retail investors. This has sent SPAC redemption rates soaring – an ominous sign of a loss in investor confidence in a successful merger. According to reports, SPAC redemption rates were as high as 50% in 2021 compared to 20% in 2020.

SGX, which unveiled policy frameworks around blank cheque entities last year, is looking to the first batch of SPACs to rekindle new IPO listings on the bourse. The Singapore government has leaned into the effort as well by roping in the Monetary Authority of Singapore (MAS), Temasek Holdings and its various investment arms to get this going.

The success of the SPAC listings on SGX will also hinge on the performance of the early sponsors – Vertex Holdings, Tikehau Capital and Novo Tellus – who make the first tranche of “Singapore Inc SPACs”. Tikehau Capital’s vehicle, in particularly, will be closely watched by global investors as one a major foreign sponsor of a SPAC in Singapore.

Homegrown investment firms – Vertex and Novo Tellus – have received a sizeable contribution from cornerstone investors and additional capital from state investor Temasek vehicles such as Venezio Investments and Fullerton Fund Management.

A strong showing by Temasek and its cornerstone investors limits Vertex and Novo Tellus’s SPAC exposure to market forces, industry watchers say. Temasek’s contributions are seen to be an explicit move to underwrite the success of the homegrown vehicles, they add.

Vertex’s SPAC, for instance, intends to raise just 30% of its IPO proceeds from the public, compared to 85.3% for Tikehau’s Pegasus Asia.

Meanwhile, Tikehau Capital’s partner and head (Asia, Australia and New Zealand) Neil Parekh remains unfazed. In an interview, Parekh said: “We didn’t even go out looking for cornerstone investors.”

“We’ve done two SPACs before. We are amongst the largest IPO investors, and we’re a globally recognised brand. There are enough investors out there reaching out to us and we’re getting so much interest, so there was really no need,” he explained.

He added that Pegasus Asia has no intentions of merging with Tikehau’s portfolio companies. “As a group, we have decided that we will never put our portfolio company into (our) SPAC. Why? We think there are too many conflicts of interest,” said Parekh.

All three have yet to pick their SPAC targets.

The SGX SPACs have structured their promote or the sponsor’s portion of shares differently.

Vertex’s VTAC and Tikehau’s Pegasus Asia only get to vest their promote upon the completion of a successful merger – tying the sponsor’s objectives to a positive outcome for the SPAC.

Vertex has tied 51% of the promote to share performance 10 years down the line, and in addition to that, to do so in tranches, indicating additional thresholds it has to cross before it gets to redeem its shares in full.

By comparison, Novo Tellus’s promote is allotted at the point of IPO, allowing them to cash out their gains ahead of a merger.

Promote structures such as Vertex’s mean that these sponsors are looking at a longer investment horizon.

“VTAC is honoured to be advancing this momentous milestone, Singapore’s first SPAC initial public offering. We believe that through VTAC, the full potential of technology investment in transformational and fast-growing businesses can now be unlocked for public market investors,” said VTAC’s chairman, Chua Kee Lock in a media statement.

“VTAC will adopt a disciplined and valuation-centric approach in selecting an acquisition target, leveraging the Sponsor’s strong experience in venture capital investing to seek an initial business combination,” added Chua.

Vertex’s VTAC and Tikehau’s Pegasus Asia are set to begin trading on January 20 and 21, respectively. Novo Tellus will announce its IPO timeline once it submits its final prospectus in the coming days.

Expand Table

Name of SPACVertex Technology Acquisition Corporation (VTAC)Pegasus AsiaNovo Tellus Alpha Acquisition (NTAA)
SPAC sizeS$200mS$150mS$150m
Sponsor/sVertex HoldingsTikehau Capital, Financiere Agache, Diego De Giorgi, Jean Pierre MustierNovo Tellus PE Fund 2
Directors and key executives Chua Kee Lock, Jiang Honghui, Steve Lai Mun Fook, Low Seow Juan, Tan Hup Foi, Anupama SawhneyEleanor Seet, Neil Parekh, Swee Yeok Chu, Su-Yen Wong, Jean Baptiste Feat, Kenny LinLoke Wai San, Keith Toh, Irwin Lim
Breakdown of proceedsSponsor: S$30m
Cornerstone investors: S$111m
International Offering: S$56m
SG Public Offering: S$3m
Total: S$200m
Sponsor/s: S$22m
International Offering: S$125m
SG Public Offering: S$3m
Total: S$150m

*Sponsor to separately commit $40m in PIPE for eligible merger
Sponsor/s: S$20m
Cornerstone Investors: S$80m
*Placement: S$47.5m
Public tranche: S$2.5m
Total: S$150m

*Represents portion set aside to be raised from private investors
Cornerstone investorsVenezio Investments, Asdew Acquisitions, DBS Bank Singapore and Hong Kong (on behalf of clients), Dymon Asia Multi-Strategy Investment Master Fund, Fortress Capital Asset Management Sdn Bhd, Fullerton Fund Management Company, Greenpark Investments, Linden Capital L.P., Lion Global Investors, Target Asset Management, The Segantii Asia-Pacific Equity Multi-Strategy Fund, UBS Asset Management-Affin Hwang Asset Management Berhad, Venezio Investments, Asdew Acquisitions, DBS Bank (on behalf of clients), DBS Bank Hong Kong (on behalf of clients), Fortress Capital Asset Management (M) Sdn Bhd, Gerald Oh, Heritas Capital Management, KSC (S), Maxi-Harvest Group, Ronald Ooi, Target Asset Management , and UBS Asset Management Singapore
Promote10m shares or 20% of IPO offering; To be allotted upon successful merger11.2% of IPO offering; To be allotted upon successful merger7.5m shares; To be allotted upon listing
Promote vesting schedule and lock-ups49% allotted 12 months after completion initial business combination;

17% allotted 10 years after completion initial business combination and return to shareholders exceeds 20%;

17% allotted 10 years after completion initial business combination and return to shareholders exceeds 40%;


17% allotted 10 years after completion initial business combination and return to shareholders exceeds 60%
Up to 50% of promote shares will be converted into shares upon successful merger;

Up to 25% of promote shares will be converted into shares upon successful merger, and when closing price equals or exceeds S$5.75 per share for any 20 trading days within a 30 consecutive-trading day period;

Up to 25% of promote shares will be converted into shares upon successful merger, and when closing price equals or exceeds S$6.50 per share for any 20 trading days within a 30 consecutive-trading day period.
12 months lock up after completion of merger
Trading day20 January, Thurs, 2pm SGT21 January, Fri, 9am SGT27 January, Thurs, 9am SGT
Target sectorsCybersecurity and enterprise solutions, AI, consumer internet and technologies, fintech; autonomous driving and new energy vehicles, biomedical technologies, digital healthcareConsumer-tech, fintech, proptech, insurtech, healthtech, and digital services in Asia PacificTechnology and industrials sector in Indo Pacific

Sub-sectors: Industry 4.0, next-generation semiconductors, cloud and edge computing, AI, medical life sciences, supply chain resiliency for advanced engineering

Note: This SGX SPAC table was last updated on 20 January 2022.

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.