In recent years, few financial instruments have generated as much debate and intrigue as the Special Purpose Acquisition Company (SPAC). Globally, SPACs gained prominence in 2020 and 2021, offering a faster and more flexible path to the public markets. Singapore was among the first Asian jurisdictions to formally open its doors to SPAC listings, positioning itself as a regional hub for innovation in capital markets.
But several years on, questions remain: Has the SPAC model delivered on its promise in Singapore? And more importantly, is it a viable long-term route for companies seeking to go public on the SGX?
Understanding the SPAC Model
A SPAC, often called a “blank check company,” is essentially a shell entity formed to raise capital through an IPO, with the sole purpose of acquiring or merging with an existing private business.
Investors buy into the SPAC’s IPO without knowing the target company in advance, relying instead on the reputation and track record of the sponsors—usually experienced investors, private equity executives, or former industry leaders. Once a suitable target is identified, the SPAC merges with it, effectively taking the private company public through what’s known as a de-SPAC transaction.
In short, SPACs invert the traditional IPO process:
Traditional IPO: The operating company lists directly.
SPAC route: A listed shell acquires the operating company, resulting in its indirect listing.
Singapore’s SPAC Framework: A Balanced Approach
Recognizing both the opportunities and risks of the SPAC model, the Singapore Exchange (SGX) introduced a regulated framework in September 2021—becoming the first major Asian exchange to do so. The framework was designed to strike a balance between flexibility for sponsors and protection for investors.
Key features of the SGX SPAC rules include:
Minimum market capitalization of S$150 million (to ensure credibility and scale).
De-SPAC timeline of up to 24 months, extendable to 36 months with shareholder approval.
Sponsor investment (“skin in the game”) of at least 2.5%–3.5% of IPO proceeds.
Mandatory independent shareholder approval for the business combination.
Redemption rights for shareholders who wish to exit before the merger.
This measured approach differentiated Singapore’s framework from more speculative markets in the U.S., where looser regulations led to waves of underperforming SPACs.
Early Movers: Singapore’s First SPAC Listings
By early 2022, three SPACs made their debut on the SGX Mainboard:
Vertex Technology Acquisition Corporation (VTAC) – sponsored by Vertex Holdings, a Temasek subsidiary.
Pegasus Asia – sponsored by European asset managers Tikehau Capital and Financière Agache.
Novo Tellus Alpha Acquisition – backed by Singapore private equity firm Novo Tellus.
These listings were welcomed as a measured test of market appetite. Each SPAC was led by experienced sponsors, strong governance practices, and credible institutional investors.
While the initial listings reflected confidence in Singapore’s SPAC framework, the pace of subsequent activity slowed. The reasons lie not in the framework itself, but in broader global dynamics.
Global Context: From Boom to Correction
The SPAC craze that began in the U.S. saw over 600 listings in 2021 alone. However, enthusiasm quickly waned as regulatory scrutiny increased and many de-SPAC companies underperformed post-merger.
Issues included:
Overly optimistic projections that failed to materialize.
Misaligned incentives between sponsors and public investors.
Market corrections that eroded valuations.
By 2023, the global SPAC market had cooled considerably, shifting from exuberance to caution. Singapore’s measured entry into the space, in retrospect, shielded its investors from some of these excesses.
Singapore’s Experience: Slow but Steady
Singapore’s SPAC framework has proven credible but conservative. It successfully established safeguards and attracted reputable sponsors, but its uptake has been limited.
Several factors explain this:
Market sentiment: Global cooling of SPAC enthusiasm reduced investor demand.
Complexity of de-SPAC deals: Finding suitable targets that meet SGX standards has proven challenging.
Competition from other routes: Many companies still prefer traditional IPOs or private capital raises.
That said, the first successful de-SPAC transaction in Singapore took place in 2023, when Novo Tellus Alpha Acquisition merged with Energy Drilling, marking a key milestone. The transaction demonstrated that SPACs can work effectively within Singapore’s regulatory and market environment when executed with discipline.
Advantages of the SPAC Route
Despite the cautious uptake, SPACs remain an appealing option for certain types of companies and investors.
1. Speed and Certainty
Compared to traditional IPOs, de-SPAC mergers can sometimes provide a faster path to market, particularly for high-growth or asset-heavy businesses that may not fit traditional listing molds.
2. Strategic Partnership
Sponsors bring not just capital but also strategic expertise, industry networks, and credibility, valuable assets for growth-stage companies entering public markets.
3. Pricing Flexibility
Unlike traditional IPOs, where valuation is largely determined during the book-building process, SPAC mergers allow the company and sponsor to negotiate valuation directly, offering more flexibility in aligning expectations.
4. Broader Investor Access
SPACs can attract both institutional and strategic investors who are aligned with the company’s long-term goals, creating a more stable shareholder base.
Challenges and Considerations
However, the SPAC route is not without its complexities:
1. Target Identification and Quality
Finding a suitable target within the de-SPAC window can be difficult. Targets must meet SGX’s listing requirements and appeal to shareholders, a dual challenge.
2. Regulatory Scrutiny
Given the relative novelty of SPACs in Singapore, regulatory oversight is rigorous. Companies must meet stringent disclosure and governance standards to ensure investor protection.
3. Market Perception
Despite global normalization, SPACs still carry mixed reputational baggage from their boom era. Convincing investors of a SPAC’s credibility requires exceptional transparency and execution.
4. Post-Merger Integration
Merging two entities, one public, one private, creates operational and cultural challenges. Success depends on clear post-deal strategy and experienced leadership.
When a SPAC Makes Sense
A SPAC listing may be viable for companies that:
Operate in high-growth sectors such as technology, clean energy, or digital finance.
Require strategic sponsors who can accelerate expansion and market access.
Have strong fundamentals but are not yet ready for a traditional IPO due to timing or valuation concerns.
For sponsors, Singapore’s framework offers a credible and regulated avenue to pursue regional opportunities, particularly across Southeast Asia’s fast-growing markets.
Final Thoughts: A Complementary, Not Competing, Path
SPACs are not a replacement for traditional IPOs, but a complementary route for companies that fit the model’s profile. Singapore’s measured, investor-centric approach has created a sustainable foundation for SPAC activity, one focused on quality over quantity.
As market confidence stabilizes and successful de-SPACs build track records, the SPAC pathway could evolve into a strategic alternative for regional growth companies seeking a public listing.
In the meantime, one thing is clear: in Singapore’s capital markets, innovation is welcomed, but it must always walk hand in hand with integrity, governance, and long-term value creation.