The dawn of the SGX SPAC: Singapore Exchange becomes the first major Asian exchange to offer SPAC listings

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This article was written by Nick Davies and Laura Luo

The Singapore Exchange (SGX) has just announced new rules that will enable Special Acquisition Companies (SPAC) listings, effective 3 September 2021.

Under this new framework, SGX SPAC listings must have the following key features:

  • A minimum market capitalisation of S$150 million
  • The de-SPAC must take place within 24 months of IPO with extension of up to 12 months subject to fulfilment of certain conditions
  • A moratorium on sponsors' shares from IPO to de-SPAC, a 6-month moratorium after de-SPAC and for applicable resulting insurers, a further 6-month moratorium thereafter on 50% of shareholdings
  • The sponsors must subscribe to at least 2.5% to 3.5% of the IPO shares/units/warrants depending on the market capitalisation of the SPAC
  • The de-SPAC can proceed if more than 50% of independent directors approve the transaction and more than 50% of shareholders vote in support of the transaction
  • The warrants issued to shareholders will be detachable and maximum percentage dilution to shareholding arising from the conversion of warrants issued at IPO is capped at 50%
  • All independent shareholders are entitled to redemption rights
  • The sponsor's promote role limit of up to 20% of issue shares at IPO

King & Wood Mallesons is delighted to have participated in consultation within the investment community on these rules. Following the consultation process, the SGX reduced the minimum capitalisation requirement from S$300 million to S$150 million. This change will make a larger pool of target companies eligible for deSPAC listings on the Singapore Exchange, and potentially enables SGX SPACs to provide much needed capital to hit a "mid-market" sweet spot for would-be SPAC targets. 

Singapore-focussed companies already involved in SPAC transactions on U.S. markets include Grab Holdings, which announced its intended listing on NASDAQ in May and online real estate firm PropertyGuru, which announced its intended listing on NYSE in July. King & Wood Mallesons has advised cornerstone investors in both companies to navigate these landmark deals. This team included Jake Robson (Singapore), Nick Davies (Singapore) and Laura Luo (U.S.).

Commenting on this announcement, Nick Davies said "The news helps to cement Singapore as the hub for capital raising and deployment in Southeast Asia. In Southeast Asia, SPACs have the potential to become a real catalyst to de-fragment the market for investment funding. They have a very valuable role to play in facilitating exits for VC and PE investors and for consolidation plays to create Southeast Asia's next regional champions".

Laura Luo added "We are already receiving enquiries from the next generation of SGX SPAC sponsors, keen to take our insights from U.S. market practice to make their SGX SPAC a success. In the U.S., the minimum criteria for SPAC raises meant that SPACs have focussed on high-growth technology companies as well as healthcare companies. With a lower minimum SPAC size for SGX, it will be interesting to see which sectors pursue SPACs on the SGX as compared to what we've seen in the U.S. market".

For further information on this topic, please follow the links below to recent webinars featuring KWM and other industry experts:

SPAC Market Update: Challenges and Opportunities in Southeast Asia

The SGX SPAC Framework/Consultation

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