Singapore Kicks Off New Era of SPACs in Asia

Vertex will be followed by Pegasus Asia, an entity sponsored by a group of European investors that starts trading on Friday. A third SPAC, sponsored by local private-equity firm Novo Tellus, is likely to debut later this month. On Friday, Pegasus Asia said it upsized its offering by 13.5% to the equivalent of $126 million, thanks to strong investor demand, while Novo Tellus plans to raise $111 million.  All three listings include so-called green-shoe options that allow underwriters to increase the final deal size.

SPACs are shell companies that first raise money from public investors and list on stock exchanges, then hunt for private companies to merge with, in what is known as a de-SPAC deal. They have been touted as a more streamlined alternative to initial public offerings and were all the rage on Wall Street in 2020 and early 2021, until the market cooled and regulators started to apply more scrutiny. 

Asia has become a source both of targets for U.S.-listed blank-check companies, and of sponsors—the shell-company managers that look for merger targets. To boost their allure to global investors and startups in the region, Singapore and Hong Kong both put forward new frameworks for SPAC listings last year. 

The Vertex listing “heralds a new era for fundraising and investment opportunities in Asia and in Singapore,” said Pol de Win, senior managing director and head of global sales and origination at Singapore Exchange Ltd., speaking at a listing ceremony Thursday that featured the striking of a gong and a confetti shower. 

“We are confident SPACs will be successful as a platform to unlock more investment opportunities in this region and that of course is broader than SPACs itself,” Mr. de Win added. 

Vertex shares closed 1% higher at 5.05 Singapore dollars per share on Thursday. 

For Tikehau Capital, TKO 3.67% a Paris-based investment firm and one of the sponsors of Pegasus Asia, launching a blank-check company in Asia is a way to stand out. Tikehau, together with Financière Agache—the family office of French billionaire and LVMH Moët Hennessy Louis Vuitton SE boss Bernard Arnault —and two other European investors, launched two SPACs on Euronext Amsterdam last year, before the third one in Singapore. 

“When we decided to launch a series of SPACs, we said at the time that if there is a window to launch in Asia before the U.S., we will try to pursue that,” said Antoine Flamarion, co-founder of Tikehau Capital, which manages 31.8 billion euros, the equivalent of $36.1 billion. “You have thousands of SPACs in the U.S. It’s very differentiating to start in Asia,” he said. 

Pegasus Asia says it is seeking to merge with businesses in “technology-enabled, disruptive, new-economy sectors” in the Asia-Pacific region. 

Singapore’s stock market has long lagged behind regional rival Hong Kong in attracting IPOs and in trading activity, and blank-check listings could help boost its listing volumes.

“We believe SGX’s primary objective is not solely to achieve a huge volume of new SPAC listings like what we saw in the U.S. early last year. Rather, the ultimate measure of success will be the quality and quantity of companies eventually listed via a de-SPAC,” said Ho Cheun-Hon, head of Southeast Asia equity capital markets at Credit Suisse Group AG, the lead underwriter of both the Vertex- and Novo Tellus-sponsored deals. 

Temasek is involved in all three SPACs. The state-backed investment powerhouse is a minority shareholder of Tikehau Capital, and is a cornerstone investor in both the Vertex and Novo Tellus deals. 

Cornerstone investors are common in Asian IPOs, and help signal confidence in a deal by committing to buy a large chunk of shares before the rest of the stock is offered for sale to other investors. Cornerstones will buy more than half of the shares being sold in both the Vertex and Novo Tellus deals. 

Hong Kong started to allow SPACs to file for listings at the beginning of this year. This week, Aquila Acquisition Corp., sponsored by the international asset-management arm of China Merchants Bank Co. , filed a listing document. 

Write to Jing Yang at [email protected]