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– The vehicle is widely used to help tech start-ups go public
– Singapore and Indonesia stock exchanges should allow PSPC
– Several Southeast Asian tech unicorns can use PSPC to publicly list
Southeast Asia is seeing a wave of interest in Special Purpose Acquisition Companies, or SPACs, with various major tech players seeing them as a way to speed up public listings. At the same time, several stock exchanges in the region are moving to authorize PSPC registrations, with a view to stimulating post-coronavirus growth.
PSPCs are shell companies created by investors and then listed on a given stock exchange. Their only function is to acquire a private company, which allows it to go public without having to go through a traditional initial public offering (IPO).
A PSPC does nothing beyond its core function – it does not produce or sell anything, and a PSPC’s only assets are funds raised from its own IPO.
Importantly, people who buy from a PSPC don’t know what their eventual acquisition goal (s) will be. This is why the PSPCs are often called “blank check companiesâ€: they give free rein to the founders to support their choice of private company. A key feature of PSPCs is that they are often led by renowned business leaders or fund managers, who negotiate past successes to instill confidence in investors.
While far from a new phenomenon, PSPCs have become a hot topic lately: PSPC’s initial offerings quadrupled last year, with vehicles raising a record $ 80 billion.
The merger with a SPAC allows a company to go public and raise capital faster and painlessly than with a traditional IPO, bypassing some of the volatility triggered by Covid-19 in global markets. At the same time, they function more like venture capital, helping investors buy high-growth start-ups on the ground floor.
