Despite being headquartered in Singapore, tech giants like Sea Limited have chosen to list in the US. Thus, Special Purpose Acquisition Companies (SPACs) are an “excellent idea” for the Singapore Exchange (SGX), says Mark Matthews, head of research, Asia Pacific at Julius Baer.
Speaking at a media briefing on Sept 14, Matthews notes that the Singapore market was “left behind” by homegrown names.
“We all know that the Singapore market has been left behind — let's face it — and hasn't managed to get any of the listings that it naturally should have gotten [like] Sea, Grab and GoTo, the merger of Gojek and Tokopedia. You would think that [they would have listed here], but they haven't been able to,” says Matthews, who is based in Singapore.
See: SGX's latest announcement on SPAC framework welcome: RHB
Grab’s record merger deal with US SPAC Altimeter Growth Corp, worth nearly US$40 billion, is expected to be completed in the fourth quarter.
A proposed revamp of Indonesia's listing rules has delayed GoTo’s plans. It is likely to launch its IPO in Indonesia early next year, followed by a US listing.
SGX recently announced easier rules for SPACs to list. From Matthews’ perspective, this is not just a welcome move, but also one with the ability to press some buttons to get local firms back to their home bourse.
“I think a little moral suasion could be applied to Grab or Sea do a little ‘common prosperity’; after all, their owners are Singapore citizens,” says Matthews in a reference to China’s recent stock market crackdown in a bid to improve social equality.
As SPACs come into play, however, Matthews is concerned about the quality of companies that may take advantage of the listing framework here.
“Unfortunately, if we look back in history, with the S-chips, for example, back in the 2000s; there were some other things like Myanmar plays; somehow Singapore does get these very speculative and lesser-quality companies listing here,” he says.
See also: The scandal of S-chips
China-based companies that listed in Singapore, otherwise known as S-chips, were actively pursued by SGX to revive interest in the stock market. In 2004 alone, there were 40 such listings.
However, many S-chips collapsed due to poor corporate governance, leaving investors with massive losses and driving them away from the market.
“So I hope that these SPACs won't be like that; I don't think they will,” he says. “So hopefully, with the SPACs, there'll be a change in that.”
