Despite its dim popularity in Asia, bourses have decided to tighten the rules for SPAC listings in the continent. Compared to SPAC listings in the US, SPAC listings in Asia are only intense in several countries.
SPAC listings culture in Asia: an overview
SPAC listings trend in the US has raked billions of dollars in. According to Reuters, the US noted around $96 billion floats raise in the United States this year after a bumper 2020. In comparison to this, the trend is lower than it is in Asia. Low valuations in some markets are limiting the popularity of SPAC listings in Asia. Furthermore, the need for strong investor protection safeguards to back SPACs is quite a concern for some companies.
In regards to SPAC listing prospects in Asia, an anonymous source from Reuters said, that “We don’t get the sense that anyone is rushing to do this”. The source added that different countries in Asia views SPAC listings differently. “Hong Kong is more strongly leaning to the no side, while Singapore, because it has less equities activity, has more pressure,” said the person.
Accordingly, Singapore Exchange’s regulatory unit said to be looking further into consultation on SPACs. Hong Kong Government, on the other hand, directed the city’s exchange and regulator to look into allowing SPAC listings. The possibility of illegal practices in the formation and trading of Shell companies are some of Hong Kong’s concerns. A Japanese government has also expressed positive feedback upon SPAC listings, saying that it might possibly boost growth. Indonesia‘s bourse also views SPACs in a good light.
Regulations to review
According to Yang Eu Jin, co-head of corporate and capital markets practise at RHTLaw Asia.SGX, the company has consulted on SPAC listings back in 2010. However, the lack of market interest ends up in the cancellation of the plan. “Singapore doesn’t have as deep liquidity and the velocity of the leading markets and that could be an issue particularly when it comes to the adoption of new investment models,” said Yang Eu Jin said.
Additionally, Christine Lee, a capital markets partner at Baker McKenzie that a lot of inquiries coming said, “A lot of the changes that were introduced from 2016-2019 would need to be changed to accommodate SPACs”.
Stefanie Yuen Thio, joint managing partner at TSMP Law in Singapore, also said, “The important thing will be to ensure that our rules are, as far as possible, aligned with U.S. listing rules for SPACs so that Singapore can be seen as the Asian alternative bourse”.
Read also: WeWork Also Relies on a SPAC for Upcoming IPO
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