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Singapore's Kacific in talks for US$1 bil SPAC merger, sources say

Bloomberg • 3 min read
Singapore's Kacific in talks for US$1 bil SPAC merger, sources say
The deal with Pegasus Asia could be Singapore's first SPAC merger. Photo: Albert Chua/The Edge Singapore
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Kacific Broadband Satellites Ltd. is in advanced talks to go public via a special purpose acquisition company, with Singapore’s Pegasus Asia Corp. the leading contender, according to people familiar with the matter.

Kacific, which provides high-speed internet access by satellite, has agreed to enter into exclusive negotiations with one SPAC after months of negotiations, giving the potential partner a few weeks to conduct due diligence and finalize a deal, said the people, asking not to be named as the matter is private. Pegasus Asia, led by Chief Executive Officer Neil Parekh, won the exclusivity in part because of its deep-pocketed backers and its location in Singapore, said one of the people.

If completed, the deal would be the first blank-cheque merger in the city-state. Kacific’s valuation after a merger is expected to be about US$1 billion ($1.38 billion), according to one of the people. Terms including valuation are preliminary and talks could still break down, the people said.

Pegasus Asia declined to comment. A representative for Kacific responded to a request for comment on several details by calling it “inaccurate,” but declined to elaborate or specify which point they were referring to.

Founded in 2013 by Christian Patouraux and Cyril Annarella, Kacific is a satellite operator which provides high-speed internet access to governments and businesses across 25 countries in Southeast Asia and the Pacific, according to its website. The company, headquartered in Singapore with main operations in Vanuatu, is hoping to solve the lack of affordable broadband internet in remote regions of the world.

Since last year, the company was looking to merge with blank-check firms in the US but changed course in part because of unfavourable market conditions and elevated risk for a regulatory crackdown.

See also: Trump Media lost US$58 million on US$4 million in sales last year

The US blank-cheque boom has turned into a bust, leaving 78 of the roughly 371 firms that merged with a SPAC floundering under US$2 a share, data compiled by Bloomberg on June 8 show. About 25 ex-SPACs are trading below US$1, a sign that they may soon be banished from high-profile exchanges.

Rising redemption rates -- investors’ ability to swap their shares for cash if they don’t like the merger -- have added to the SPAC industry’s woes. The average redemption rate remained at about 80% level in May, compared with 29% a year ago, Boardroom Alpha data showed.

Shares of Pegasus Asia held steady at $4.70 in Singapore on Friday. The company raised $170 million in a January initial public offering. It is the first Singapore-listed SPAC with international backers, which include European asset manager Tikehau Capital and Financière Agache, a holding company of Bernard Arnault, head of French luxury group LVMH.

Tikehau Capital could make an announcement on one of its SPACs in the coming weeks, co-founder Antoine Flamarion said in an interview with Bloomberg TV in April. Tikehau also declined to comment for this story.

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