(Bloomberg) — Blank-check companies could revive Singapore’s languishing market for initial public offerings as stock exchanges from Mumbai to Seoul profit from blockbuster deals.
Singapore Exchange Ltd. this week presented rules for the listing of special purpose acquisition companies, or SPACs, as it attempts to get a slice of what has become a worldwide frenzy. It is allowing SPACs to list under a rulebook that is lenient than initially envisioned and more in line with the framework in the U.S.
SGX hosted just three IPOs this year and has struggled to attract big newcomers amid long-time woes of low liquidity and squeezed valuations. The move on SPACs, which is expected to draw in listings from sectors including technology, comes as global financial regulators are raising scrutiny of these structures.
READ: Singapore Rolls Out SPAC Rules as Global Scrutiny Rises
“The SGX is sending a clear signal that it’s engaged with market participants and is very much open for business,” said Stefanie Yuen Thio, joint managing partner at TSMP Law Corp. a law firm. “What we need are top flight sponsors to launch their SPACs here, and attract quality companies.”
India’s Zomato Ltd., Indonesia’s Bukalapak.com PT and South Korea’s Krafton Inc. are some examples of Asian startups that listed in recent weeks in their home markets in deals worth more than $1 billion each. Singapore’s most recent tech debut, Aztech Global Ltd., raised around $220 million in March.
Singapore’s stock market has been traditionally dominated by finance and property firms, held mostly as dividend plays, and is short on tech names — the hottest theme in global equity markets since the pandemic began.
Three of the four most-heavily weighted stocks on the SGX are banks, the biggest of which — DBS Group Holdings Ltd. — is partly owned by state investment company Temasek Holdings Pte. The fourth, Singapore Telecommunications Ltd., is controlled by Temasek.
While listings by real estate investment trusts have been a success for SGX — the most recent REIT listing, United Hampshire U.S. REIT, happened 18 months ago. Part of the difficulties are due to broader economic factors, such as the city-state’s size and small population compared to other Southeast Asian markets such as Indonesia and Thailand, said Robson Lee, a partner at Gibson Dunn, a law firm.
“I can see why SGX would want to develop a market for SPACs to list in Singapore, particularly given the buzz at the moment around Asean technology companies, but whether it moves the needle remains to be seen,” said David Smith, senior investment director for Asian equities at Aberdeen Standard Investments.
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The Pipeline
“We are actively engaging with potential sponsors and are expecting a robust pipeline of Asia-focused SPACs,” Mohamed Nasser Ismail, SGX’s head of equity capital markets, said on Thursday following the launch of the…
Read More: SPACs Can Help Singapore Break Its Driest IPO Spell in Years