SINGAPORE (Sept 2): Singapore Exchange unveiled new rules allowing special purpose acquisition companies (SPACs) to list in the city-state, after easing some measures viewed as too strict by participants, as it seeks to tap a global trend in such listings.
SGX's rules, effective from Friday, would make it the first Asian bourse to allow blank check companies to list after the frenzy seen in such investment vehicles in the United States since last year, although the popularity seems to be peaking.
Following a market consultation, SGX's regulatory arm halved the minimum capitalisation requirement for SPAC listings to S$150 million (US$112 million) from its proposal issued in March.
It also said it would now allow warrants to be detachable and all shareholders would have redemption rights, making the overall rules mostly similar to US markets.
"We reduced the market cap in response to market feedback that the biggest pool of Asian targets is in the S$500 mln to S$1 billion market cap range and the size of the target is usually 3-8 times the size of the SPAC," Tan Boon Gin, CEO of Singapore Exchange Regulation, told Reuters.
Citing sources, Reuters reported on Wednesday that the SGX was set to issue easier rules for SPAC listings.
SPACs are shell corporations that list on stock exchanges and then merge with an existing company to take that public, offering it shorter listing timeframes and strong valuations.
"We are likely to see significant interest from sponsors and institutional investors in SPACs and that bodes well for the Singapore market," said Yin Mei Lock, a partner at Allen & Overy.
In other markets, Hong Kong and Indonesia are taking tentative steps for potential SPAC listings, while Britain has eased rules. But such investment vehicles are peaking in popularity in the United States as regulators there clamp down on SPACs after a listing frenzy.
A spokesperson from the Monetary Authority of Singapore said the local rules position SGX "as a regional first-mover in serving Asia's fast-growing new tech and new economy companies' financing needs", while providing safeguards for investors.
SGX, which has struggled to capture large listings of high-growth firms and faces prospects of losing out in courting Southeast Asian startups looking to list in their home markets or in the United States, expects the rules to boost listings.
"We are actively engaging with potential sponsors and are expecting a robust pipeline of Asian-focused SPACs," Mohamed Nasser Ismail, SGX's head of equity capital markets said in a statement.
In its consultation paper for SPAC listings, SGX had outlined measures to rein in risks seen in US SPACs.