Singapore SPACs need to go hunting

Poor man’s private equity or private equity’s poor cousin? Blank-check companies, which will soon be arriving in Singapore, could easily fall in one or the other group, depending on the quality of their early sponsors.
Celebrities need not apply. Serena Williams or A-Rod won’t be luring Indonesian travel booking website Traveloka or Vietnamese gaming firm VNG Corp to Singapore. And that’s the most important thing. Without exciting startups from Southeast and South Asia — those that might otherwise chase US listings — the city-state will struggle to make a real asset class out of special purpose acquisition companies, or SPACs.
Rather than glamorous backers, the financial centre will want a few blockbuster targets: young, fast-growing firms offering a slice of private-equity-type returns. If the first few deals turn out to be as dull as the rest of the city’s equity-raising market, interest in the jaded local investor community might drop fairly quickly.
Singapore has seen just three initial public offerings this year, garnering less than $250 million. The 69 IPOs in rival Hong Kong have netted $35 billion.
Clearly, Singapore Exchange Ltd will want the new asset class to shake things up by repeating the magic of real estate investment trusts. By traded value, roughly a fifth of the shares changing hands in the city nowadays are REITs.
But with institutionalised landlordship, Singapore had a homegrown advantage: Real estate has been a time-tested ticket to wealth on the small, space-constrained island. In a low interest-rate environment, earnings from a steady stream of rents have trumped meager yields from bank deposits.

—Bloomberg