Singapore May List Blank-Check Companies, Or SPACs, This Year

The Singapore Exchange, a major stock market in Asia, has reportedly been considering the idea of listing blank-check companies. Now, CEO Loh Boon Chye said in an interview that “if the market is supportive, we hope to be able to do that sometime this year.” He told Bloomberg on Wednesday (Feb. 17) that an impending review of the matter could take some time.

Such stock market listings are called special purpose acquisition companies, or SPACs. A SPAC has no commercial operations, but is formed to raise cash and go on the hunt for an existing company or companies to acquire. The Singapore Exchange had reviewed the idea in 2010, but decided against it.

“The world has changed, capital markets have evolved since then,” said Loh, a longtime banker who took over as CEO in 2015. He told Bloomberg that the persistence of low interest rates, shorter business cycles, volatile markets and government stimulus measures have increased both the need for and the ability to seek funding. Loh said that SPACs provide another approach for investors and may lower their risk.

This form of taking a company public has gained prominence over the past year. In 2020, SPACs along with other ways of going public have even rivaled the IPO in the U.S. Bloomberg reported that U.S. firms in 2020 raised more than $435 billion from stock sales — beating out the $279 billion raised in 2014, the previous annual record. Only $100 billion of that tally came from traditional stock listings.

In December, the U.S. Securities and Exchange Commission green-lighted a plan by the New York Stock Exchange to approve “direct” listings by companies. This would allow companies to go public without having underwriters, which are typically large banks that charge hefty fees to bring the deals to fruition.

“This is a game-changer for our capital markets, leveling the playing field for everyday investors and providing companies with another path to go public at a moment when they are seeking just this type of innovation,” NYSE President Stacey Cunningham said via a statement.