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Update: Singapore Exchange allows listing of Special Purpose Acquisition Companies (SPAC) on its mainboard
Update: Singapore Exchange allows listing of Special Purpose Acquisition Companies (SPAC) on its mainboard

September 8, 2021

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Singapore Exchange (SGX) recently announced new rules that will enable Special Purpose Acquisition Companies (SPACs) to list on the Mainboard of the Singapore Exchange Securities Trading Limited (Mainboard) effective 3 September 2021.

A SPAC, commonly referred to “blank cheque company” is a company with no commercial operations that is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring an existing company.The SPAC framework covers the broad admission criteria for a SPAC listing: conditions for founding shareholders, the management team, and controlling shareholders and the business combination requirements.

Broad Admission Criteria

  • Minimum SGD150 million market capitalisation
  • Public float requirements - At IPO, a minimum of 300 public shareholders must hold at least 25% of the total number of issued shares and, upon completion of the initial business combination, a minimum of 500 public shareholders must hold at least 25% of the total number of issued shares of the resulting issuer, in line with current Mainboard requirements.
  • Minimum IPO price - Set at SGD5 per share
  • No dual class structure at IPO
  • Escrow - At least 90% of IPO proceeds must be placed in escrow pending the business combination.

Conditions for Founding Shareholders, Management Team, and Controlling Shareholders

  • Moratorium on Sponsors’ shares from IPO to de-SPAC, a 6-month moratorium after de-SPAC and for applicable resulting issuers, a further 6-month moratorium thereafter on 50% of shareholdings.
  • Sponsors must subscribe to at least 2.5% to 3.5% of the IPO shares/units/warrants depending on the market capitalisation of the SPAC
  • De-SPAC must take place within 24 months of Initial Public Offering (IPO) with an extension of up to 12 months subject to fulfilment of prescribed conditions
  • De-SPAC can proceed if more than 50% of independent directors approve the transaction and more than 50% of shareholders vote in support of the transaction
  • Warrants issued to shareholders will be detachable and maximum percentage dilution to shareholders arising from the conversion of warrants issued at IPO is capped at 50%
  • All independent shareholders are entitled to redemption rights
  • Sponsor’s promote limit of up to 20% of issued shares at IPO

SPAC framework will enable companies to raise capital from an alternative source with greater certainty on price and execution. For startups, acquisition or merger with a SPAC instead of taking the traditional IPO route directly is a viable option for a number of reasons. They can retain an agreed equity stake in the business, raise funds and have the flexibility to negotiate favourable deal terms such as valuation and additional investment with the SPAC sponsor (currently not available for the traditional IPO route). It also enables startups to go public in a short time frame and reduce fund raising costs, gain access to experienced management teams of the SPAC sponsor.

Response to comments on consultation paper relating to proposed listing framework for SPAC issued by SGX can be accessed from here.

We hope you will find the update useful.


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