Offshore SPACs in Asia - The Next Chapter - Lexology

2020 saw an explosion of special purpose acquisition companies (“SPACs”) in the United States that was largely driven by favorable economic returns to SPAC IPO sponsors, liquidity and pricing certainty offered by SPACs to target companies and investors. The extended low-interest rate environment and the speed to market that SPACs offer compared to traditional IPOs has also played a significant role. Although an initial drop of SPAC activity characterized the second quarter of 2021 - due to the US Securities and Exchange Commission’s concerns regarding forward looking statements and the accounting treatment of warrants - 2021 looks set to be another record-breaking year for SPACs with around US$110 billion raised in capital as at 15 April 2021 .

Most SPAC IPOs have so far been arranged by US managers and take place on NASDAQ or the New York Stock Exchange. However, the tides are turning as Asian players are looking to enter this space and we have seen an increase in enquiries from Asia-based sponsors and investors with respect to SPAC IPOs and de-SPACs alike. The Singapore Exchange announced new rules on 2 September 2021 to enable SPACs to list on the Main Board of the Singapore Exchange which, coupled with the influx of seasoned managers with proven track records and the increasing volume of high-profile SPAC transactions, has arguably lent sufficient credibility to the structure as a reputable investment vehicle to trigger widespread interest in Asia.

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