Three Singapore-listed special purpose acquisition companies (spacs) are facing a ticking clock to announce their outcomes. Listed on the Singapore Exchange (SGX) in early January 2021, the three spacs -– Vertex Technology Acquisition Corporation (VTAC), Pegasus Asia (Pegasus) and Novo Tellus Alpha Acquisition (NTAA) — have since not made any formal announcements.
The three spacs must announce a business combination agreement (BCA) or request a deadline extension soon to meet the timeline. As of Sept 13, none have made any public statements, and they have declined to comment to The Edge Singapore.
A spokesperson at SGX says it has been actively engaging market professionals and sponsors over the last 12 months on their de-spac preparatory work for the upcoming business combinations. The three spacs are expected to make relevant announcements at the end of September, conscious of the January 2024 timeline.
What will they be announcing? Sources familiar with the matter informed The Edge Singapore that two spacs — Pegasus and VTAC — have already identified their acquisition targets and are raising a private investment in public equity (PIPE) round.
The path ahead for the third player NTAA is murkier. One source tells The Edge Singapore that the management is mulling whether to dissolve the spac and return the funds to investors, while another says that a dissolution is highly unlikely. NTAA executive chairman and CEO Loke Wai San stayed mum when approached for comments.
Target companies
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The target company for Pegasus is said to be Singapore-based Kacific Satellites. In June 2022, Bloomberg reported that Kacific was in talks to list through a spac, with Pegasus being the leading contender.
Back then, there was speculation that Pegasus had the deal exclusively due to its well-funded backers and Singapore presence. If the merger succeeds, Kacific’s value is projected to reach around US$1 billion ($1.3 billion).
Kacific, founded in 2013 by Christian Patourax, operates wholesale broadband satellite services, serving telecom operators, ISPs, and governments. It boasts experienced global telecom and infrastructure investors. Although details on Kacific’s backers are scarce, it secured US$20 million in funding from an undisclosed UK-based family office in 2016. In early August, it was reported that the Philippines’s National Development Corp plans to invest US$30 million in Kacific and its second satellite, which is set to be launched in 2027.
See also: NTAA spac is dissolving, confirming The Edge Singapore's report
Kacific launched its first Ka-band high throughput satellite, Kacific-1, in 2019 to stream high-speed, low-cost, ultra-reliable broadband to rural and suburban areas of the Pacific and Southeast Asia. One of the company’s longtime partners is ST Engineering iDirect, the satellite innovation arm of SGX-listed ST Engineering, which provides Kacific with ground infrastructure.
In June 2022, Pegasus commented that some details were “inaccurate” without providing further explanation or clarification. The spac had previously announced that it plans to target companies or businesses in the technology-enabled sectors such as consumer-tech, fintech, proptech, insurtech, healthtech and digital services in the Asia Pacific region.
Market chatter has it that VTAC has its sights on a “new media” company. A possible target is iGet Entertainment, co-founded by the first and only Singapore K-pop group creator, Alan Chan, who founded the K-pop act SKarf. The company is a Singapore-based edutainment-tech company with a presence in several parts of Asia, including Singapore, Korea, China and Hong Kong.
Its entertainment arm focuses on artist development and training, concerts and events management, music production and publications, and content creation. iGet has announced that it will venture into movies and drama production. It has signed a memorandum of understanding with JP Entertainment to jointly organise concerts in Singapore, a scene that is seeing a large comeback following the post-pandemic reopening of the economy. JP Entertainment has brought performers like Aaron Kwok, Kenny G and Kitaro to Singapore.
iGet announced in November 2022 that it plans to list in 2024. When approached by The Edge Singapore, Chan says the company cannot provide further information on the planned listing and its possible stakeholders due to non-disclosure agreements.
At its listing, VTAC announced that it would focus on targets in artificial intelligence, cyber security and enterprise solutions, consumer internet and technologies, financial technologies, autonomous driving and new-energy vehicles, biomedical technologies and digital healthcare.
If VTAC’s target is in new media, it will add to a growing list of media and entertainment stocks already listed on the SGX. There is mm2 Asia, which produces films and dramas and operates cinemas. Under executive chairman Melvin Ang, mm2 Asia holds stakes in two separately listed companies: Concert producer UnUsUal and post-production house Vividthree Holdings.
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Another listed entity, GHY Culture and Media Holding has concert production and artist management arms besides producing dramas and shows. Most recently, NoonTalk Media — which has a heavier focus on artist management — is also listed here, although it is into producing shows and events.
As for NTAA, it previously announced that it was looking for targets within the technology industrial sector in the Indo-Pacific region, with a focus on investment themes built around “critical technology” and “macro growth shifts with multi-year tailwinds” like Industry 4.0, next-generation semiconductors, cloud, edge computing, AI, medical life sciences and supply chain resilience for advanced engineering.
Of the three spacs, NTAA has the widest range of potential acquisition targets. Still, the start-up scene has faced challenges over the past two years.
Space for more
Although progress for Singapore-listed spacs remains mixed, Hong Kong’s first spac — listed later than Singapore’s three — has already moved ahead. Its first spac, Aquila Acquisition Corp, was listed at HK$10 ($1.74) each last March. Backed by brokerage CMB, it raised some HK$1 billion and, on Aug 31, announced its BCA.
The three SGX-listed spacs focus more on targets in the broader technology sector, but Aquila’s target is more old economy: ZG Group, a leading iron and steel e-commerce platform in China. The negotiated value of ZG Group for the transaction is HK$10 billion, with a committed PIPE investment of approximately HK$605 million.
This marks the first de-spac transaction in Hong Kong since introducing the spac frameworks in the financial hub in January last year. The Hong Kong transaction comes before any of the Singapore de-spacs despite taking a more conservative approach in its framework.
Hong Kong requires higher sponsor commitments and lock-up periods, and it only allows professional investors to participate in a spac IPO. However, Singapore allows for retail investors’ participation.
While safeguarding investors, SGX’s strict spac regulations may be a challenge for spacs to find suitable targets in tough times. “The de-spac process is particularly suited for pioneer companies in new sectors that need more time to tell their stories and educate their investors. We have carefully designed our rules to bring in quality sponsors that can add value to such companies and to ensure that such companies still meet our IPO criteria and are ready for the scrutiny of the public markets,” says the SGX spokesperson in an email interview.
At this point, investor interest has seen a dip for the three spacs, as they are all trading below their IPO price. The three listed at the same IPO price of $5 per share.
VTAC’s shares are trading at $4.66 on Sept 14, whereas Pegasus and NTAA are trading at $4.50 and $4.59. Their warrants, meanwhile, closed at 10 cents, 3.3 cents and 8 cents, respectively. If spacs decide they cannot find a suitable target, they will return the capital to investors.
In an August 2022 interview with SGX’s global head of equity capital markets, Mohamed Nasser Ismail, he cautioned that the outlook for 2022 and 2023 was uncertain due to high inflation, increasing interest rates, and heightened geopolitical risks.
After listing these three spacs, there have been no new spac listings, despite SGX mentioning that there was interest from several parties. “The situation today is not too many spacs money chasing after opportunities. When market conditions improve, we will see spac listings coming back to the market, and successful de-spacs will create a virtuous cycle where each successful spac will drive more investor interest and demand for future ones,” said Nasser in the interview.
Earlier this month, Nasser’s departure from SGX was reported as the exchange underwent reorganisation, combining the equity capital markets unit with the debt capital markets and corporate client coverage divisions.
A source familiar with the matter says it has taken a while for Singapore spacs to finalise any transactions due to the challenging financial environment. Finding suitable targets with strong growth potential has taken longer than expected, largely due to the spac frameworks launching at an “unfortunate timing.”
In 2021, 613 spacs were listed in the US, which plummeted to just 86 in 2022. This decline occurred just as Asian exchanges like Singapore’s and Hong Kong’s introduced spac frameworks. The drop in spacs also coincided with a global slowdown in new listings as investors contended with persistently higher interest rates.
“If they are able to identify good targets with good growth potential that they can lend their expertise and experience to, I think it’s still something for their shareholders to consider when the time comes to put a vote,” the source adds.
Amendment note: We have made changes to the article to better reflect iGet's role in the Singapore concert scene. Following the publication of the story, iGet co-founder Alan Chan have also clarified that the company is seeking to raise funds via other means and not via spacs.
