How to qualify for SPAC listings on the SGX

The move would give smaller, faster companies better access to SGX funds.

The Singapore Exchange (SGX) has recently announced its framework for special purpose acquisition company (SPAC) listings on its platform.

This makes it the first major Asian exchange to allow SPAC listings.

Here are the eight key criteria that SPACs must meet in order to become SGX-listed, as shared by an RHB report:

• A minimum market capitalisation of $150m;

• De-SPAC must take place within 24 months of the initial public offering (IPO) (The SGX allows an extension of up to 12 months, subject to conditions);

• Moratorium on sponsor’s shares from IPO to de-SPAC, a 6-month moratorium after de-SPAC and for applicable resulting insurers, a further 6-month moratorium thereafter on 50% of shareholdings;

• Sponsors must subscribe to at least 2.5% to 3.5% of the IPO shares/units/warrants depending on the market capitalisation of the SPAC;

• Approval of more than 50% of the independent directors of the transaction, along with support from more than 50% of the shareholders.

• Warrants issued to shareholders will be detachable and maximum percentage dilution to shareholders arising from the conversion of warrants issued at IPO is capped at 50%;

• All independent shareholders are entitled to redemption rights; and

• Sponsor’s promote limit of up to 20% of issued shares at IPO.

The SGX will work with the Securities Investors Association (Singapore) on educating potential investors on this new process.

In a Reuters report, JPMorgan co-head of Souteheast Asia investment banking, Vineet Mishra, said that fast-growing companies would now have access to markets previously reachable only to larger, established companies.

“Companies in the real estate, consumer and infrastructure space have traditionally fuelled the growth in Singapore's capital markets. By expanding the products' range to include SPACs, there might be the opportunity for fast-growing companies to also access these markets,” Mishra said.

Hong Kong and Indonesia are also currently mulling SPAC listings on their respective stock exchanges.