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The curious case of SPACs

Emir Hrnjic
Emir Hrnjic1/15/2021 06:31 AM GMT+08  • 6 min read
The curious case of SPACs
In 2020 alone, roughly 250 SPAC IPOs raised US$83 billion ($110 billion) — roughly equal to funds raised by conventional IPOs.
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The Covid-19 pandemic has triggered massive uncertainty in global markets and the US Federal Reserve responded by cutting interests rate to 0.25%. As investors started chasing higher-yielding investment opportunities, the somewhat–obscure concept of a Special Purpose Acquisition Company (SPAC) came back into the spotlight. In 2020 alone, roughly 250 SPAC IPOs raised US$83 billion ($110 billion) — roughly equal to funds raised by conventional IPOs. Moreover, SPAC IPOs in this banner year raised more capital than all previous SPAC IPOs combined. Even 2021 started with a bang, raising roughly US$8 billion in the first two weeks and is on track to double the record of capital raised in 2020.

Recently, Asian investors started jumping on the SPAC bandwagon too. For instance, SPACs sponsored by Asia–based Antony Leung, Richard Li, CITIC Capital, Maso Capital, and Malacca Straits have raised more than US$2.5 billion while Singapore–based Vickers Venture Partners, Japan–based Softbank and Hong Kong–based Provident Acquisition recently filed to raise almost US$1 billion via SPAC IPOs. The Singapore Exchange is even considering allowing SPACs to list due to their popularity.

Furthermore, more than a dozen SPACs are holding talks with Southeast Asia’s startups about potential mergers. For instance, Bridgetown Holdings approached Tokopedia — Southeast Asia’s largest e-commerce platform, while Traveloka — Southeast Asia’s largest online travel app — announced that it is going public with a SPAC as a possible option. Moreover, reports revealed that other Asian unicorns such as Grab, Gojek, and Bukalapak have all been recently approached by SPACs.

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