Out-Law / Your Daily Need-To-Know
The Singapore Exchange (SGX) is considering allowing special purpose acquisition companies (SPACs) to list in the first quarter of 2021.
SPACs, normally known as blank check companies, are shell companies that raise funds through an initial public offering (IPO) to acquire an existing company. After raising funds, SPACs sponsors are usually given two years to 'de-SPAC' to find a target company and complete an acquisition. If no suitable deal secured, the SPAC is liquidated, and the funds returned to shareholders.
According to Singapore Exchange Regulation (SGX RegCo) chief executive officer Tan Boon Gin, SGX has noticed the popularity of SPACs listings in other markets and started to consider allowing them to list.
According to Business Times, having SPACs to list in Singapore would attract investors and sponsors, but market participants said that success will depend on how the listing rules are set.
Tax and private wealth expert Valerie Wu of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, said: " Fund managers have set up sub-funds under a Variable Capital Company (VCC), Singapore's new investment fund vehicle launched last year, to invest in New York Stock Exchange-listed SPACs. Having SPACs in Singapore would add to the vibrancy of the investment and wealth management ecosystem."
Lin Zhu of Pinsent Masons MPillay, said: "SPACs were previously considered by SGX in 2010 but market conditions may not have been ready. It would now be an exciting prospect and opportunity to have SGX- listed SPACs."
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