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Singapore lists first SPAC as Asia investors warm up to blank check firms

Singapore’s first blank check company started trading on Thursday, Vertex Venture is sponsored by state investor Temasek and it kicked-off the growing interest of Asian investors to blank-check companies.

Four months ago, the Singapore Exchange started to allow special purpose acquisition companies (SPACs) or blank-check firms to be listed on their main board. 

In this latest news in Singapore, we analyzed why SPACs are emerging in Asia.

What is a SPAC?

A special purpose acquisition company or SPAC is basically a company that has no intended business operation. These shell companies are formed to raise capital via an IPO or initial public offering. Also known as blank-check companies, the sole purpose of these firms is to merge with or acquire an existing private company and make it publicly-owned.

The SPAC will prepare in the meantime until the target company is ready to be merged with a SPAC to be listed as a public company. Throughout the years, SPACs became popular in Europe and North America and slowly made their way in Asia.

The first SPAC in Singapore

Last year, the Singapore Exchange listed Vertex Venture and it became the first SPAC in the Singaporean market. This new type of company became a craze in the United States back in the first quarter of 2021.

Chua Kee Lock, the CEO of Vertex Venture, stated in a listing ceremony attended by business executives, lawyers and bankers, he said “Being the first SPAC in Singapore, we had to go through challenging and unknown waters.”

The company aims to expand in sectors such as financial technology and cyber security. Through its 13 main investors such as Temasek-linked bodies and Dymon Asia, Vertex Technology Acquisition Corp raised funds worth S$200 million which is equivalent to $148 million US dollars.

“The goal is to engage prolific technology firms which typically would not consider this system and help them to take the risks by sponsoring them to go public,” stated by Chua.

Other blank-check firms

Another SPAC called Pegasus Asia debuted this Friday on the Singapore Exchange and it is considered as the second blank-check company in Singapore. 

The company debuted in the main board of SGX on Friday, it was after the first blank-check company Vertex Venture debuted in the stock exchange. 

The company has raised a capital of $170 million Singaporean dollars which is equivalent to $126.27 million US dollars. The total proceeds are from the initial public offering or IPO.

Pegasus Asia is now considered as the first special purpose acquisition company listed in Singapore that has international investors. Some of its sponsors include the Bernard Arnault-owned holding company called Financiere Agache and a global asset-management group called Tikehau Capital. 

According to Neil Parekh, the CEO of Pegasus Asia, he said “We are very certain that we would be able to find a target company that is fit for the kind of acquisition that we aim for.”

A third SPAC was listed in Singapore Exchange and it is backed by Novo Tellus Capital Partners, however the company is still not named because the sponsorship process is still not completed.

A growing interest on SPACs in Asia

The region of Asia is the new landscape for a potential boom of special purpose acquisition companies. 

In fact, Grab—one of the renowned companies in Southeast Asia, became a publicly-owned company in the United States when it went in an acquisition deal with a SPAC firm. 

Conclusion

There is an ongoing growth in interest in blank-check companies throughout Asia, with the amount of sponsors or investors based in the region is also on the rise.