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Published: 18:31, September 02, 2021 | Updated: 18:44, September 02, 2021
S'pore rolls out SPAC listing rules as global scrutiny rises
By Bloomberg
Published:18:31, September 02, 2021 Updated:18:44, September 02, 2021 By Bloomberg

Office workers walk into the Singapore Exchange (SGX) building in Singapore on July 21, 2016. (ROSLAN RAHMAN / AFP)

Singapore Exchange Ltd has introduced a framework for blank-check companies to list in the city state, the latest bourse to host the vehicles whose popularity in global financial markets has surged over the past year.

Special purpose acquisition companies, or SPACs, will be allowed to list in Singapore starting Friday under a more liberal rulebook than initially envisioned by the exchange. The entities require a minimum market capitalization of S$150 million (US$112 million), half of the amount SGX proposed earlier, while certain limits on warrants and share redemption have been removed, a statement from the bourse showed Thursday.

Special purpose acquisition companies, or SPACs, will be allowed to list in Singapore starting Friday under a more liberal rulebook than initially envisioned by the exchange

Singapore’s approval comes as global financial regulators are stepping up scrutiny of SPACs. While firms worldwide have raised a total of US$130 billion this year via SPACs -- according to data compiled by Bloomberg -- the pace of listings has abated in recent months with the US Securities and Exchange Commission calling for more disclosures and a recent earnings bust validating some concerns over the structures.

ALSO READ: Stern test for Asian SPAC listings as regulators mull rule changes

While the “honeymoon period” with blank check companies in the US seems to have come to an end, “international sponsors may see Singapore as a good neutral exchange to launch their SPACs and attract Asian targets” given the Sino-US tensions, said Stefanie Yuen Thio, joint managing partner at legal firm TSMP Law Corp.

SGX relaxed its rules for SPAC listings following market feedback. The exchange’s regulatory arm had earlier this year proposed tighter restrictions than in the US as it looked to boost the local IPO market while also seeking to address worries over investor protection.

In an interview in February, SGX’s chief executive officer Loh Boon Chye had said the exchange is aiming to list its first SPAC this year.

Relaxed Rules

The pool of Asia-based target firms for SPACs, which sell shares to raise money and explore takeovers, is mainly in the S$500 million to S$1 billion range -- making a S$150 million threshold more market-friendly. Warrants will now be detachable from shares while investors who vote in favor of a business combination will be allowed to redeem shares, according to the new rules.

The market wants “features that align sponsor interest with shareholder interest rather than what we proposed, which were features that restricted shareholder rights,” said Tan Boon Gin, chief executive officer at Singapore Exchange Regulation.

Under the new rules, sponsors will be required to have a minimum equity participation of 2.5 percent to 3.5 percent. There will also be moratorium requirements on sponsor shares before and after de-SPAC.

READ MORE: Goldman Sachs sharpens push to win Asia SPAC market share

De-SPAC must take place within 24 months of IPO, with an extension of up to 12 months while disclosure requirements at de-SPAC are the same as for typical initial public offerings, according to the new rules.


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