Analysis

Singapore listed SPACs to be a reality soon ?

, Nasdaq

Asia is not only a fertile ground for targets these days but it has also become a hotspot for sponsors. Hence it may come as no surprise that the SGX, the first major Asian bourse to consider the listing of SPACs, is calling for market feedback from until April 28 after which it could introduce regulations by mid-year.

SGX is proposing safeguards to rein in risks seen in U.S. SPACs such as excessive dilution by shareholders and sponsors and a rush by shell firms to merge with targets. SGX plans a minimum S$300 million ($223 million) market value for SPACs.

In U.S. SPACs, the shares and warrants may be traded separately, meaning investors can sell their shares but still benefit via the warrants if the SPAC is successful but without contributing capital to the company. However it does not seem like the SGX would allow this. They are proposing that warrants cannot be detached from underlying shares, and that only those investors who vote against a business combination be allowed to redeem shares.

Other measures by SGX include a minimum equity participation by founding shareholders and allowing SPAC mergers to be completed within three years instead of the typical two years seen in U.S. SPACs.

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