By Anshuman Daga
SINGAPORE, Jan 20 (Reuters) - Singapore, seeking to revive its lacklustre fundraising market, is pulling out all the stops to emerge as a key listing venue for smaller sized blank-check firms as a Temasek-backed firm debuts on Thursday.
The listing sponsored by Vertex Venture Holdings comes four months after Singapore Exchange relaxed its proposed rules for special purpose acquisition companies (SPACs) in response to market feedback.
Singapore's inaugural SPAC listing will also mark the first major debut of such vehicles in Asia since they became the hottest dealmaking frenzy in the U.S. in early 2021 before fizzling out due to regulatory changes.
"The point is to attract high-growth technology companies which conventionally would not have considered this market and now they have sponsors who can take over the risk also," said Chua Kee Lock, CEO of Vertex Venture, a subsidiary of state investor Temasek.
With a focus on sectors such as cyber security and fin tech, Vertex Technology Acquisition Corp raised S$200 million ($148 million), with 13 cornerstone investors such as Temasek-linked entities and a fund operated by Dymon Asia, contributing 55%.
The SPAC is sponsored by Vertex Venture, which manages $5.1 billion of assets with a portfolio of more than 200 companies. The SPAC has up to two years to find a target.
The second SPAC, Pegasus Asia, backed by European asset manager Tikehau Capital and Financiere Agache, the holding company of LVMH luxury goods chief Bernard Arnault, raised S$150 million. It plans to invest in tech-enabled sectors and will list on Friday.
Southeast Asia, home to fast-growing economies such as Indonesia and Vietnam, is seeing a boom in dealmaking as investors bet on post-pandemic technology plays in a region of 650 million people.
While Singapore is considered one of Asia's leading financial and business hubs, its bourse has struggled to capture big IPOs. Last year, fundraising on SGX halved to $565 million, a six-year low, with just 8 listings, data from Refinitiv shows.
SGX is offering a regulatory framework similar to that in the United States, including allowing participation of retail investors but with safeguards including a minimum subscription level from sponsors, SGX is hoping that sponsors and investors will find it an attractive SPAC market.
Analysts say some risks for investors include SPACs overvaluing companies and not finding ideal targets. U.S. SPACs had a roller coaster-ride as investor enthusiasm at the start of 2021 turned to disappointment because of their poor returns.
SPACs or shell firms raise money in an IPO and put it in a trust for the purpose of merging with a private company and taking it public. They aim to offer shorter listing timeframes and strong valuations.
Since investors are unaware of the target company ahead of the IPO, SPACs often grant them the right to redeem their initial investment as an incentive.
Eng-Kwok Seat Moey, head of capital markets at DBS, said SPACs are being accepted by many investors as an alternative platform to gain access to high-growth start-ups which have typically tapped private equity markets.
"Several Singaporean and regional companies in high-growth, high-tech sectors will be mature for listing on public markets in the coming years," she said.
"These companies would be good provide fertile grounds for business combination targets for SPACs listed on SGX."
Malaysia, which first listed SPACs a decade ago before they fizzled out, said it is reviewing its rules. South Korea has also listed SPACs but these are tiny.
Hong Kong, home to large Chinese listings, is also allowing SPACs to list from this year but these IPOs are not open for retail investors.
($1 = 1.3500 Singapore dollars) (Reporting by Anshuman Daga; Editing by Kim Coghill)