Singapore Exchange Seeks Feedback on SPACs Listing at SGD 300 Million Market Capitalization
1st April 2021 | Singapore
The Stock Exchange of Singapore, Singapore Exchange (SGX) is seeking market feedback on a proposed regulatory framework for the listing of Special Purpose Acquisition Companies (SPACs) on its Mainboard.
” Singapore Exchange SPACs Listing at Minimum SGD 300 Million Market Capitalization “
The proposed listing criteria includes a minimum of SGD 300 million ($223 million) market capitalization, at least 25% of total issued shares are issued to at least 500 public shareholders at IPO, 90% of IPO proceeds to be placed in escrow and a 3-years time frame to complete merger or acquisition of business into the SPAC. (IPO ~ Initial Public Offerings)
- Minimum of SGD 300 million ($223 million) market capitalization
- At least 25% of total issued shares are issued to at least 500 public shareholders at IPO
- 90% of IPO proceeds to be placed in escrow
- 3 years time frame to complete merger or acquisition of business
CEO of Singapore Exchange Regulation (SGX RegCo), Tan Boon Gin:
“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.”
Proposed Listing Framework for SPACs:
The consultation paper seeks feedback, views and suggestions from the public on SGX’s proposal to introduce a primary listing framework for Special Purpose Acquisition Companies (“SPACs”) in Singapore, to list on the Mainboard of Singapore Exchange Securities Trading Limited (“SGX-ST”)(“SPACs Framework”) and lays out possible proposals and safeguards for minority investors.
SPAC Listing Criteria:
- Minimum S$300 million market capitalisation
- At least 25% of the total number of issued shares to be held by at least 500 public shareholders at IPO.
- Minimum IPO price of S$10 a share
- At least 90% of IPO proceeds placed in escrow pending the acquisition of a target company
- Cash will be returned on a pro rata basis from the amount in escrow to any shareholder voting against the business combination or upon the liquidation of the SPAC.
- Any warrant (or other convertible securities) issued with the ordinary shares of the SPAC at IPO must be non-detachable from the underlying ordinary shares of the SPAC for trading on SGX.
Shareholders, Management Team:
- Founding shareholders and/or the management team must hold minimum equity at IPO of between 1.5% to 3.3% (subject to market cap.)
- Moratorium on the shareholding interests held by the key parties such as the founding shareholders and controlling shareholder(s) at various junctures.
SPAC & Merged Company:
- 3-year permitted time frame from IPO date to complete the business combination.
- Combined business must have at least one principal core business with a fair market value forming at least 80% of the gross IPO proceeds in escrow.
- Combined business will have to meet the initial Mainboard listing criteria.
- The business combination can only proceed with approval from a simple majority of the SPAC’s independent directors and a simple majority of the independent shareholders.
- Liquidation of the SPAC may occur under certain conditions (Eg. Critical founding shareholders or management team change)
- Appoint: (a) an accredited Issue Manager as Financial Advisor to advise merger; and (b) an independent valuer to value the target company.
- Shareholders’ circular on the combined business must contain prospectus-level disclosures including on key areas such as: (a) financial position and operating control; (b) character and integrity of the incoming directors and management; (c) compliance history; (d) material licences, permits and approvals required to operate the business; and (e) resolution of conflicts of interests.
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