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PETALING JAYA: Malaysia is seeing a rising number of special-purpose acquisition companies (SPACs) that are eager to tap opportunities in the US capital market.
Shanghai-headquartered investment bank Arc Group managing partner Carlos Lopez said many companies in Malaysia were interested in listing on the New York Stock Exchange or Nasdaq.
“Currently, Arc has advised nine sponsors that are doing initial public offerings (IPOs) in Malaysia and we are assisting three companies to find targets. Many companies in Malaysia are interested in listing in the United States,” he told StarBiz.
Lopez said one of the problems with Malaysian SPACs is that they did not have a sponsor to vote for the business combination with the target company it wanted to merge with.
“In contrast, one of the benefits of SPACs in the United States is that the sponsor (investors who support a SPAC in its pre-IPO stage) had a vote, so it results in significantly fewer votes needed from public investors and makes the merger easier to complete.”
There are some entry barriers by the government for a SPAC on Bursa Malaysia. Likewise, there are government restrictions in Singapore and Hong Kong. Comparatively, the US market is considered favourable for SPACs, said Lopez.
“Malaysian SPACs have been around for a long time. The United States is the most established SPAC market but Malaysia is more established in this space than countries such as Hong Kong, Singapore and The Netherlands.
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“Malaysia’s government is working on new rules to make Malaysian SPACs more attractive for investors. We will need to wait until those new rules are effective to see how they will operate and how investors will react.”
Currently, Lopez said Malaysia was not a good option for SPACs until the new regulation is announced.
“To our knowledge, there are 11 SPACs that have filed for IPOs and only two SPACs are successful. The others could not get enough shareholders to accept the deals. The hit rate in this market is deeply unimpressive.
“Since Arc was founded in 2008, we have advised on 27 IPOs, nine of which were from Malaysia,” he said, adding that most of the SPACs sold their shares at US$10 (RM44.45) apiece.
Graphene producer Graphjet Technology Sdn Bhd will become the third Malaysian unicorn to be listed on the Nasdaq Stock Exchange in New York via a merger SPAC, Energem Corp.
The Malaysian unicorn has signed a business combination agreement worth US$1.49bil (RM6.62bil).
SPACs, also known as blank-cheque companies, have no operations and are designed to merge with private companies to take them public. A SPAC typically has two years to do a deal or it must return the money to investors.
Such mergers have become popular alternatives to traditional IPOs in the past few years, allowing companies to raise cash while also making projections the firms typically could not make within the confines of a traditional IPO.
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2023-02-05 00:13:23
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