IPO

Singapore Exchange to issue easier rules for SPAC listings

, Reuters

Singapore Exchange is preparing to roll out easier guidelines for listings of special purpose acquisition companies (SPACs) in the city-state, which would make it the first major Asian bourse to accept such investment vehicles.

The changes come after SGX, which has struggled to capture large listings of high-growth companies, received market feedback that some of its earlier proposals were too strict.

SGX’s regulatory arm is now considering easing a minimum S$300 million ($223.2 million) market value proposal for SPACs and a proposal that warrants cannot be detached from underlying shares.

SGX faces prospects of losing out in courting Southeast Asian start-ups looking to list in their home markets here or in the United States.

Though SGX will have an early mover advantage, one lawyer said it would still be challenging for it to become a vibrant platform for SPACs. “Whether SPACs will take pride of place in the Singapore market, like real estate investment trusts, will depend on whether there is a perceptible track record of good valuations and liquidity post-SPAC mergers,” said Robson Lee, a partner at Gibson, Dunn & Crutcher LLP.

In a consultation paper for SPAC listings issued in late March, SGX had outlined measures to rein in risks seen in U.S. SPACs such as excessive dilution by shareholders and sponsors and a rush by these firms to merge with targets.

SGX was likely to introduce other measures to safeguard investor interests but would simplify proposed guidelines to still make it attractive for SPACs.

In other markets, Hong Kong and Indonesia are taking tentative steps for the potential listing of SPACs, while Britain has eased rules. here But such investment vehicles are peaking in popularity in the United States as regulators there clamp down on SPACs here after a listing frenzy.

Hamstrung by a small base of retail investors, SGX has grappled with low liquidity and valuations. However, over the past few years, it has built up a lucrative Asian derivatives business and still remains a global listing venue for real estate investment trusts.

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