Singapore Stock Exchange Hall (SGX).
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Singapore – IN Singapore Stock Exchange You may receive your first application for a SPAC listing in the “next two weeks,” CEO Luo Bun-chi told CNBC in an exclusive interview.
SGX Corporation announced earlier this month New rules allow SPACs to be included on its platform. Luo said the exchange is talking to potential sponsors and is seeing a “strong pipeline” of potential listings.
“We think some of them will come through looking for submission in the next couple of weeks,” the CEO said.
“But it is clear that the market has to hold it until it is presented, and to list the money and raise it,” he added. “If the markets continue to rally well, we believe some of these pipelines will crystallize into actual public offerings.”
SPACs, or Special Purpose Acquisition Companies, are shell companies with no operations. They are created and sponsored – usually by institutional investors – with the sole purpose of raising money through an initial public listing, and eventually acquiring another operating company.
SPAC has been around for decades in the US but has grown in popularity over the past year as an alternative way for private companies to list on stock exchanges as it bypasses the traditional underwriting path which can be a complex and time-consuming process.
SGX has sought for years to boost IPO activity in Singapore, but it has struggled to snatch major technology listings that have been one of the hottest investment trends globally.
On Friday, the Singapore government announced a set of initiatives to Lure “high-growth promising” companies to be included in the list in the city state.
Luo said the Covid-19 pandemic has caused economic uncertainty, but it has not dampened optimism among investors significantly. The CEO said such market sentiment, along with the efforts of the government and SGX, could help boost IPO activity in Singapore.
“In the current low interest rate environment, investors need to look for returns and returns. And this continues,” he said. “The overall low price environment is positive for stocks, and therefore for capital appreciation or stock listings.”
In the first half of 2021, SGX had three IPOs with total proceeds of S$337 million ($250.54 million), according to Deloitte data. The data showed that compared to 11 IPOs that raised about S$1.34 billion throughout 2020.
While tech stocks have garnered a lot of investor interest in the past year, Luo said companies in “traditional sectors” have been resilient during the pandemic.
“Don’t forget that these are strong sectors and within that, if they are strong companies, they reward shareholders,” the CEO said.
Singapore Standard Straits Times Index Controlled by finance and property. It has outperformed many of its regional peers this year, gaining about 7.8% as of Thursday’s close.
As companies in the digital economy sectors grow, Luo said, it is “normal” that SGX will see some changes in the mix of its listed companies. He told CNBC that he hopes the initiatives announced by the government on Friday will bring in more tech companies to list on SGX.
“Some of these new economic companies that we’ve been talking about … are operating out of Singapore, operating out of Singapore in this part of the world, and hopefully some of them will come to market.”
CNBC’s Weizhen Tan contributed to this report.