The boom in blank-cheque companies may look like a bust in New York, but the pre-packaged investment arrangements look set for a second act in Southeast Asia as two Temasek Holdings-backed firms prepare to launch Singapore-listed SPACs, including one with property technology as a potential focus.
Tikehau Capital, a Paris-based asset management firm that counts Temasek as a shareholder, filed a prospectus Thursday with Singapore’s central bank for a special purpose acquisition company called Pegasus Asia, a vehicle that would raise S$128 million ($94 million) in a unit offering and seek to enter into a merger or similar arrangement with one or more businesses.
The SPAC’s sponsors, which include Pegasus Europe founders Diego De Giorgi and Jean Pierre Mustier along with luxury goods holding firm Financiere Agache in addition to Tikehau, will invest an additional S$22 million in founder units. They plan to focus on businesses involved in proptech, fintech, consumer tech, insurance tech, health tech or digital services, primarily but not exclusively in Asia Pacific.
Also on Thursday, Temasek venture capital arm Vertex Venture Holdings submitted documents for its own SPAC that would raise S$170 million or more and seek to acquire a business with a core technology focus. The unit sale will mark the first SPAC listing on the Singapore Exchange, which hosted just eight initial public offerings last year, Bloomberg reported.
In its prospectus, Pegasus Asia alluded to co-living and co-working platforms as promising areas of growth in the proptech sector.
“Interest in co-living or home sharing platforms has been rising as individuals seek more cost-effective alternatives to home ownership, amidst a backdrop of increasing home prices in cities driven by continued urbanisation,” the SPAC said.
The company gave a vote of confidence to flexible office solutions as an ongoing tool for businesses in the post-pandemic era.
“As restrictions are lifted and the physical impact of COVID-19 subsides, we expect new permanent hybrid working models to emerge with a mix of working from different environments, such as the home, cafes, co-working spaces and traditional offices,” Pegasus Asia said.
Tikehau Capital, together with Singapore’s City Developments Ltd, already controls Singapore-listed real estate investment trust IREIT Global, which owns a portfolio of office properties across five German cities. In April 2020, Louis d’Estienne d’Orves, an executive director of Tikehau, was named CEO of IREIT Global’s manager.
Thursday’s filing comes less than nine months after the same group of sponsors backing Pegasus Asia had teamed with LVMH Group’s billionaire boss Bernard Arnault to raise €500 million ($565 million) in a private placement for Pegasus Europe, an Amsterdam-listed SPAC focused on opportunities in the continent’s financial services industry. In early December, Arnault and Mustier, who served as a Tikehau partner from 2015 to 2016, announced that they would launch a second Amsterdam-listed SPAC and are aiming to raise €200 million through that vehicle.
SPACs Slide in Second Half
The advantage of a SPAC to investors is that the IPO proceeds are held in trust and are returned to the shareholders if the SPAC fails to complete a merger or acquisition within a certain window. But that safeguard did not prevent many backers of the investment innovation from losing large chunks of their equity last year.
Singapore’s Grab Holdings, which went public through a Nasdaq-listed SPAC in early December, has seen its shares lose 40 percent of their value since that time. WeWork, which had its own SPAC debut in October, had lost around 30 percent of its value in the first two months of trading before regaining some ground in the past few weeks.
Despite increasing regulatory scrutiny, SPACs gained popularity as a way to bypass the traditional IPO process and quickly gain access to public capital markets. Last year saw 602 SPAC IPOs raise $160 billion, shattering 2020’s record $83.3 billion and up an order of magnitude from the $13.6 billion reaped in 2019.
But most of 2021’s SPAC IPOs occurred in the first three months of the year, including Los Angeles-based proptech investment firm Fifth Wall’s February capital raise of $345 million for a NASDAQ-listed vehicle.
By September, the Wall Street Journal was reporting that the 137 SPACs which had achieved mergers by mid-February of last year had lost 25 percent of their value within six months and had cost their backers as much as $100 billion in lost equity.
US Crackdown in the Making
Last month, the head of the US Securities and Exchange Commission ordered staff to draw up suggestions on how to ensure that SPAC investors received the same protections they would in a traditional listing, the Financial Times reported.
“Investors may be making decisions based on incomplete information or just plain old hype,” SEC chairman Gary Gensler said in a December speech at a conference.