Singapore Exchange could receive its first SPAC listing application within weeks, CEO says

SINGAPORE — The Singapore Exchange could receive its first application for a SPAC listing in “the next couple of weeks,” Chief Executive Loh Boon Chye told CNBC in an exclusive interview.

SGX earlier this month announced new rules allowing SPACs to list on its platform. Loh said the exchange is speaking with potential sponsors and is seeing “a robust pipeline” of potential listings.

“We think some of them would come through in terms of seeking out the submission in the next couple of weeks,” the CEO said.

“But obviously, the market has to hold for them to be on submission, and really list and raise funds,” he added. “If the markets continue to go up well, we think some of those pipelines will crystallize into actual IPOs.”

SPACs, or special purpose acquisition companies, are shell companies without any operations. They are created and sponsored — usually by institutional investors — for the sole purpose of raising money through an initial public listing, and eventually acquire another operating business.

SPACs have been around for decades in the U.S. But they’ve exploded in popularity over the past year as an alternative way for private businesses to list on stock exchanges since they bypass the traditional IPO route which can be a time-consuming and complicated process.

SGX has for years sought to boost IPO activity in Singapore, but has struggled to clinch major tech listings that have been one of the hottest investment trends globally.

On Friday, the Singapore government announced a package of initiatives to lure “promising high-growth” companies to list in the city-state.   

The Covid-19 pandemic has caused economic uncertainty, but it hasn’t dented optimism among investors significantly, said Loh. Such sentiment in markets, along with efforts by the government and SGX, could help boost IPO activity in Singapore, said the CEO.

“With the current low interest rate environment, investors need to search for yield, for returns. And that continues,” he said. “A low-rate environment generally is positive for equities and, consequently, for capital raising or equity listings.”  

In the first half of 2021, SGX had three IPOs with total proceeds of 337 million Singapore dollars ($250.54 million), according to data by Deloitte. That compared with 11 IPOs that raised around 1.34 billion Singapore dollars throughout 2020, the data showed.

While tech stocks have garnered a lot of investor attention in the past year, Loh said companies in “traditional sectors” have been resilient through the pandemic.

“Don’t forget that these are strong sectors and within that, if they’re strong companies, they do reward shareholders,” said the CEO.

Singapore’s benchmark Straits Times Index is dominated by finance and property stocks. It has outperformed many of its regional peers this year, gaining around 7.8% as of Thursday’s close.  

As companies in the digital economy sectors grow, it’s only “natural” that the SGX would see some changes to the mix of its listed companies, said Loh. He told CNBC he hopes the initiatives announced by the government on Friday will bring more tech companies to list on SGX.

“Some of these new economy companies that we talked about … operating out of Singapore, operating beyond Singapore in this part of the world, we are hopeful that some of these will come to the market.”  

— CNBC’s Weizhen Tan contributed to this report.