Southeast Asia, the place the know-how startup scene thrives on financial progress and a continual want to spice up monetary inclusion, is fertile floor for acquisitions for listed blank-check corporations in 2021, analysts say.
Particular function acquisition corporations, that are skeleton organizations that launch with the intention of shopping for and reverse merging with a personal firm, have turn out to be in style alternate options to conventional IPOs to take corporations public. SPACs from all over the world are largely listed in inventory exchanges within the U.S., the place the itemizing guidelines require them to accumulate personal belongings from any nation inside two years after debut. A surge of newly listed SPACs in 2020 means that extra corporations are on the hunt for offers earlier than their two-year deadline is up.
“Lately there was momentum and urge for food constructing in APAC, significantly in Southeast Asia, the place tech-focused startups and unicorns — and their buyers — view SPACs as a extra environment friendly monetization or ‘exit’ choice when in comparison with typical IPOs,” mentioned Mark Uhrynuk, company and securities companion at Mayer Brown.
“Whereas the capital markets in China provide fundraising choices to home startups there, corporations from Southeast Asia, usually talking, have fewer choices. Accordingly, they might be extra open to the SPAC different for fundraising,” he mentioned.
With fairly a couple of Southeast Asian unicorns — lots of that are know-how corporations seeking to go public — SPAC sponsors have had loads of goal choices, consultants mentioned.
PT. Tokopedia, an e-commerce big in Indonesia, instructed S&P International Market Intelligence that it’s accelerating its itemizing plans for the reason that pandemic has catalyzed its enterprise progress. It’s contemplating SPAC as “a possible choice,” having appointed Morgan Stanley and Citi as advisers. The agency’s spokesperson didn’t present additional particulars.
Indonesia-based tech firm Traveloka can also be contemplating a SPAC as attainable stock-market itemizing choice, in keeping with a December 2020 Reuters report. President of the net journey app, Henry Hendrawan, mentioned the corporate had been “approached by a couple of” SPACs.
SPAC vs. IPO
The SPAC route is interesting to corporations on the lookout for a quicker exit and fewer pre-IPO scrutiny, mentioned Bruce Pang, head of macro and technique at China Renaissance Securities (Hong Kong).
“SPAC may be one of many in style itemizing choices for startups and IPO-ready unicorns in high-growth sectors comparable to tech, healthcare and fintech, giving a quicker, extra versatile and lower-cost strategy to elevate funds with shorter itemizing timelines than a standard IPO,” Pang mentioned.
Valuation is one other issue when a agency decides if SPAC is the best way to go ahead.
“In sectors the place there will not be too many comparable companies or the place there’s a variety of uncertainty about valuations, about how large the markets are … these sectors would profit loads by means of itemizing by way of SPAC in contrast with an IPO,” mentioned Vidhan Goyal, chair professor of finance on the Hong Kong College of Science and Expertise.
Specialists added that startups discover it simpler to be valued by means of a SPAC itemizing versus a standard IPO as a result of the valuation is decided by personal negotiations between the sponsor and the goal.
Asia is the subsequent hotspot
Asia is seeking to see extra SPAC exercise, each from Asia-headquartered SPACs itemizing in U.S. or Asian exchanges in addition to SPACs buying goal companies in Asia, or so-called de-SPAC-ing, in keeping with Marcia Ellis, international chair of the personal fairness group at Morrison & Foerster.
“The 220 SPACs listed final 12 months [in the U.S.] are wanting round for targets. This 12 months is unquestionably the 12 months by which these de-SPAC-ing transactions need to occur. However we’re additionally seeing increasingly more SPACs listed with at the least 80 SPACs listed in simply in January,” she mentioned.
In accordance with S&P International Market Intelligence knowledge, Asia-Pacific-headquartered SPACs raised $2.4 billion in 2020, a major improve from 2019’s $613 million. That quantity is on an upward pattern in 2021. As of Jan. 31, eight SPACs have already raised $1.71 billion.
Though most SPACs are listed within the U.S., many funds that listed these companies are from Asia and of appreciable measurement.
Final 12 months, CITIC Group Corp.’s CITIC Capital Acquisition Corp. floated a US$276 million SPAC on the New York Inventory Trade searching for corporations within the vitality effectivity, clear know-how and sustainability sectors. Richard Li, son of Hong Kong tycoon Li Ka-shing, has additionally partnered with billionaire Peter Thiel to ascertain a US$595 million SPAC in December and one other US$299 million on Jan. 28. A SoftBank Group Corp.-backed SPAC additionally closed its IPO on Jan. 13, elevating US$603.8 million in proceeds.
In accordance with S&P International Market Intelligence knowledge, 19 South Korean SPACs have been listed in 2020, in contrast with 5 from China, 4 in Hong Kong and two in Singapore.
“South Korea is without doubt one of the few Asian nations with a framework and laws round SPAC itemizing and, the truth is, the primary SPAC IPO in South Korea occurred method again in 2010,” mentioned Anish Ailawadi, senior director of funding banking at Acuity Data Companions.
“So whereas Asia is seeing a variety of curiosity round SPACs, it is a residence run for U.S. exchanges given lack of established SPAC guidelines on Asian inventory exchanges barring South Korea and Malaysia.”