For the past couple of months, special purpose acquisition companies (SPACs) have been making the headlines in Singapore. SPACs are essentially blank-cheque companies that are formed for the sole purpose of looking for another private company to merge with. Many market experts consider them one of the key trends to watch out for in the coming months.
True enough, just before 2021 ended, the Singapore Exchange (SGX) announced that it had already created and approved a listing framework for SPACs in the country. And as early as January 2022, Singapore has already seen its first-ever SPAC listing with Vertex Technology Acquisition Corporation (VTAC). To learn more about VTAC, here are some of the most critical pieces of information you need to know about Singapore’s first SPAC listing.
What is VTAC?
VTAC is Singapore’s first-ever SPAC, incorporated in the Cayman Islands to execute an initial business combination. Formed by Vertex Venture Holdings (Vertex Holdings) backed by Singapore’s leading investor Temasek, VTAC aims to enable public market investors to delve into investment opportunities in value-creating businesses at the rapid growth stage of their life cycle.
On 13 January 2022, VTAC opened its offering after registering its final prospectus with the country’s central bank, the Monetary Authority of Singapore. And on 20 January, it had already begun trading units on SGX.
Essential Information About VTAC’s Listing
As indicated in its preliminary prospectus, VTAC is issuing 11.8 million units at an offer price of S$5 for each piece. Of the 11.8 million units, 11.2 million or about 95% of the units are offered through international placement. This includes foreign institutional and selected investors outside the U.S., as well as institutional and other investors in Singapore.
In Singapore, particularly, a public offering of 600,000 units is also expected. Each unit consists of one share and 0.3 of a warrant for each share, issued after the offering has been completed. Holders of shares that have not been tendered for redemption at or around the initial business combination’s completion will also be given an additional right to 0.2 of a warrant per share at a later time. The shares and warrants that make up the units will begin trading as separate counters on 7 March, 45 days from VTAC’s listing date.
What to expect from VTAC in the coming months
In the next few months, VTAC is expected to focus on finding a target business in either of these profitable sectors: Financial technologies, consumer internet and technologies, autonomous driving and new-energy vehicles, biomedical technologies and digital healthcare, cybersecurity and enterprise solutions, and artificial intelligence.
VTAC will look at whether or not the market easily understands the business in selecting its target company. All of its potential target companies will be weighed against these essential criteria:
- Driven by technology
- Strong management team
- Cross-border potential
- Rapidly growing and scalable business model
- At the turning points of their growth journey
In other words, VTAC is expected to choose target businesses that have successful products, a proven business model, and a potential to expand further. Aside from finding the right target business, VTAC will primarily focus on establishing an incentive structure that will get people to focus on the business combination and convince them to stay with the company after the business combination and beyond.
VTAC’s incentives are geared towards encouraging a long-term view, with the allotment of 10 million shares after the initial business combination’s completion or the promote shares linked to price-based and time-based vesting conditions. Its sponsor, Vertex Holdings, will only vest 49% of the promote shares after 12 months from the business combination, with 17% upon shareholder return that exceeds 20% or at S$6 share price, 40% or S$7 share price, and 60% or S$8 share price. This strongly emphasises the importance of continuing the business’ growth beyond the initial combination.
The coming of VTAC marked the beginning of the expected rise of SPACs in Singapore’s capital market. After its debut, it has officially made Singapore the first major financial centre in Asia to welcome SPACs. With the ongoing buzz around the revolutionary capital-raising opportunities provided by SPACs, you can expect to see more and more SPAC listings on SGX in the coming months and years. For this reason, you may need the assistance of our valuable services in the future, such as our business valuation and employee shares option plan (ESOP) services.
Additionally, at Max Lewis Consultants Pte Ltd, we provide a wide range of other services specially designed to streamline and expand your business operations. From tax planning and transfer pricing advisory to GST ASK and Singapore valuation services, we offer all the assistance you need to meet your business needs and requirements. Feel free to contact us today to learn more about reliable and expert-quality services.