Auditorium of the Singapore Exchange (SGX).
Roslan Rahman | AFP | Getty Images
SINGAPORE – The Singapore Exchange could receive its first application for a SPAC listing in “the coming weeks,” Chief Executive Loh Boon Chye told The Washington City Times in an exclusive interview.
SGX announced new rules earlier this month allowing SPACs to be listed on its platform. Loh said the show is in talks with potential sponsors and sees a “robust pipeline” of potential offerings.
“We think some of them will be looking for the submission in the coming weeks,” the CEO said.
“But it’s clear that the market needs to hold on before submitting, and really list and fundraise,” he added. “If the markets continue to climb well, we think some of those pipelines will crystallize into actual IPOs.”
SPACs, or special purpose acquisition companies, are shell companies without any operation. They are created and sponsored – usually by institutional investors – for the sole purpose of raising money through an initial public listing and eventually acquiring another operating company.
SPACs have been around in the US for decades, but they have become extremely popular in the past year as an alternative way for private companies to list on exchanges, as they bypass the traditional IPO route, which is a time-consuming and complicated process. could be.
SGX has spent years trying to boost IPO activity in Singapore but has struggled to land major tech listings that have been one of the hottest investment trends globally.
On Friday, the Singapore government announced a package of initiatives to attract “promising high-growth” companies to the city-state.
Attracting technical IPOs
The Covid-19 pandemic has created economic uncertainty but has not significantly affected investor optimism, Loh said. Such sentiment in the markets, along with the efforts of the government and SGX, could boost IPO activity in Singapore, the CEO said.
“In the current environment of low interest rates, investors have to look for yield, for yield. And it continues,” he said. “A low interest rate environment is generally positive for equities and, consequently, for capital increases or stock listings.”
In the first half of 2021, SGX had three IPOs with total revenue of Singapore dollars $337 million ($250.54 million), according to data from Deloitte. That compares to 11 IPOs that raised about 1.34 billion Singapore dollars in 2020, the data shows.
While technology stocks have attracted a lot of investor attention in the past year, Loh said companies in “traditional sectors” have remained resilient during the pandemic.
“Remember, these are strong sectors and within that, if they’re strong companies, they reward shareholders,” the CEO said.
Singapore’s benchmark Straits Times Index is dominated by financial and real estate stocks. It outperformed many of its regional counterparts this year, gaining about 7.8% at the end of Thursday.
As companies in the digital economy sectors grow, it’s only “natural” that the SGX would see some changes in the mix of its publicly traded companies, Loh said. He told The Washington City Times that he hopes the initiatives announced by the government on Friday will bring more tech companies to SGX.
“Some of these new economy companies that we talked about… operating out of Singapore, operating outside of Singapore in this part of the world, we hope some of these will come to market.”
— Weizhen Tan of The Washington City Times contributed to this report.