Singapore SPAC Listings: Key Updates Following SGX Response Paper Publication

When does the SPACs Framework commence?

The amendments to the Mainboard Rules took effect September 3, 2021. 

Why is the SPACs Framework relevant and of note? 

The introduction of the SPACs Framework provides fast-growing companies with an alternative fundraising route, with the benefits of greater certainty on price, execution, and timing, as compared to a traditional initial public offering (IPO). 

Investors are provided with greater diversity of choice in terms of investments in the private equity space, and most notably, the SGX is the first major bourse in Asia to offer an avenue for SPACs listings.

Key features of the SPACs Framework

We set out below a summary of the key responses by the SGX: 

1. Minimum market capitalization is halved to S$150 million from the initial proposal of S$300 million. 
2. Business combination must take place within 24 months of IPO, with an extension of up to 12 months if a binding agreement for the business combination has been entered into by the 24th month.
3. There is a moratorium on sponsors’ shares from IPO to the completion of the business combination as well as a six-month moratorium after the business combination and, for certain applicable resulting issuers, a further six-month moratorium on 50% of shareholdings.
4. Sponsors must subscribe to at least 2.5% to 3.5% of the IPO shares/units/warrants based on a tiered structure, depending on the market capitalization of the SPAC.
5. Business combination can proceed if more than 50% of independent directors approve the transaction and more than 50% of shareholders vote in support of the transaction. 
6. Warrants issued to shareholders will be detachable, and the maximum percentage dilution to shareholders arising from the conversion of warrants issued at IPO is capped at 50%. 
7. All independent shareholders are entitled to redemption rights, including independent shareholders who voted in support of the business combination. 
8. Sponsor’s promote limit of up to 20% of issued shares at IPO.

From the Response to Feedback from the SGX, several aspects of the SPACs Framework previously proposed in the Consultation Paper were recalibrated, taking into account market and industry feedback, positively reflecting a recalibration of the balance between providing and addressing investor protection requirements, and promoting a viable SPACs ecosystem and listing venue.   

The SPACs Framework is expected to revitalize Singapore’s market for listings and attract regional funds and prominent Southeast Asian startups seeking to secure funding.