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Singapore Exchange consults on SPAC listings
Proposals aimed at safeguarding investor interest while meeting capital-raising needs
2 Apr 2021 | Tom King

The Singapore Exchange is seeking market feedback on its proposal to accept the listing of special purpose acquisition companies on its main board.  The start of the consultation makes SGX the first significant Asian exchange to consider SPAC listings under a proposed regulatory framework. The consultation period will last until April 28.

The SGX said in a statement is intends to seek a balanced regime that effectively safeguards investors’ interests against certain concerns posed by the unique features of SPACs, while meeting the capital-raising needs of the market.

Also known as a blank cheque company that is designed to facilitate the acquisition of other entities, SPACs have been pulling in billions of dollars from retail investors. The listing of SPACs is currently allowed in several stock exchanges, including the Nasdaq and New York Stock Exchange.

Among the issues the exchange is seeking feedback on include admission criteria, conditions for founding shareholders, management teams and controlling shareholders, and business combination requirements.

The consultation paper proposes a minimum S$300 million (US$222.81 million) market capitalization and at least 25% of the total number of issued shares to be held by at least 500 public shareholders at the initial public offering.

Founding shareholders and/or the management team must hold a minimum equity at IPO of 1.5% to 3.3%, depending on the SPAC market capitalization then, and a three-year permitted time frame from IPO date to complete the business combination.

Commenting on the move, Tan Boon Gin, CEO of SGX regulation, says: “SPAC listings have attracted interest in major markets due to their speed to market and ability to offer price certainty in valuing target companies. In reviewing the viability of SPACs, we note that recent SPACs developments have brought to the fore certain risks, in particular excessive dilution and the rush to de-SPAC. We are therefore proposing measures to address these risks, with the aim of creating credible listing vehicles that will increase investor choice and result in successful, value-creating combinations for their shareholders.”