Singapore’s public listed market is entering a new era. On Jan 13, the Singapore Exchange (SGX) saw the launch of its first special purpose acquisition company (spac) listing by Vertex Technology Acquisition Corp (VTAC).
Given how two other spacs are being launched around the same time, VTAC says it is differentiated by its sponsor, Vertex Ventures, a leading global venture capital firm based in Singapore with a global network of venture capital funds in key innovation markets and ecosystems, comprising an active portfolio of over 200 companies with assets under management of over US$5.1 billion ($6.86 billion). Vertex is an indirect wholly-owned subsidiary of Temasek Holdings.
“We believe that through VTAC, the full potential of technology investment in transformational and fast-growing businesses can now be unlocked for public market investors,” says chairman of VTAC and CEO of Vertex Holdings Chua Kee Lock (main image).
“VTAC will adopt a disciplined and valuation-centric approach in selecting an acquisition target, leveraging the sponsor’s strong experience in venture capital investing to seek an initial business combination,” he adds.
VTAC’s acquisition mandate will be to complete an initial business combination with one or more businesses that may, among others, display the following characteristics: technology-driven; fast-growing and scalable; at an inflection point of their growth journey; having strong management teams; having cross-border potential with market leadership; and attractively priced relative to its peers, which would provide upside potential and benefit from public market access.
VTAC’s potential target will be businesses riding on the following six investment themes: cybersecurity and enterprise solutions; artificial intelligence; consumer Internet and technologies; financial technologies; autonomous driving and new-energy vehicles; and biomedical technologies and digital healthcare. These themes are also areas where Vertex can claim “deep domain expertise”.
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Speaking to The Edge Singapore, Chua says that any of these six industries have very high growth potential and VTAC will be on the lookout for companies within these areas that can benefit from the growth opportunities that VTAC has to offer and can be “super-charged” with the funds that the blank cheque company has to offer.
The way Chua sees it, this IPO is somewhat similar to a midterm exam — necessary but not the most important exam yet. He says, with a deadpan demeanour: “Don’t get too excited about it.” The “final exam”, according to Chua, is what investors should be looking forward to, which is the de-spac process.
The real value, he adds, will be about two years from now, when VTAC intends to meet the de-spac deadline. As a show of commitment, the sponsor will be locking up its investment units, while the promotional shares, which are the managements’ incentive, will only be dished out after the de-spac period.
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VTAC, in a sense, has made local market history by being the first spac to be launched on the SGX. Chua calls this listing “an important initiative” that can “support and help SGX reinvigorate” the local bourse. “We are not in the business of operating a spac, we are a technology investor and we are largely listing via spac because we want to support what the Monetary Authority of Singapore [MAS] and SGX are doing to create a differentiation and reinvigorate the market,” he says.
This IPO’s joint issue managers are Credit Suisse (Singapore) and DBS Bank. Credit Suisse, DBS Bank and Morgan Stanley Asia (Singapore) are the joint global coordinators, joint bookrunners and joint underwriters.
“Having brought the first REIT to list in Singapore 20 years ago, and seeing the sector mature and develop into one of the region’s leading international REIT hubs today, we look forward to achieving the same, or even greater success for spacs 20 years from now,” says Eng-Kwok Seat Moey, group head of capital markets at DBS Bank.
In conjunction with this listing, VTAC will be offering some 11.8 million units at $5.00 per unit, of which 11.2 million units are in the placement tranche for institutional investors, with another 600,000 units for retail investors.
Each unit comprises one share and 0.3 warrant per share, with an additional right to 0.2 warrant per share which will only be issued later to shareholders that have not been tendered for redemption at or around the completion of the initial business combination.
This warrant structure, Chua explains, is to encourage shareholders to invest in VTAC for the longer term.
As it is, VTAC has managed to garner a strong investor interest. It has secured 13 cornerstone investors to take up a total of 22.2 million cornerstone units, or $111 million, which is equivalent to 55.5% of the post-offering share capital of the spac — that is assuming the over-allotment option is not exercised.
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Two of these cornerstone investors are fellow Temasek subsidiaries Venezio Investments and Fullerton Fund Management, which will hold direct interests of 15.0% and 6.5% in VTAC respectively.
The public offer will open at 8pm on Jan 13 and close at 12pm on Jan 18. Trading is expected to commence at 2pm on Jan 20. The shares and warrants comprising the units are expected to begin separate trading automatically as separate counters at 9am on the 45th calendar day from the listing, being March 7.
Novo Tellus
On the same day, VTAC launched its IPO, Novo Tellus Alpha Acquisition (NTAA), a spac backed by fund manager Novo Tellus, lodged its preliminary prospectus to raise $150 million.
The offer totals 10 million units priced at $5 each. It consists of 9.5 million units in the placement tranche and 0.5 million units set aside for retail investors.
In addition, a group of cornerstone investors are taking up 16 million units, raising another $80 million. Novo Tellus, as the sponsor, is itself taking up 4 million units, or $20 million.
NTAA will be looking for targets within the technology industrials sector in the Indo-Pacific region, with a focus on investment themes built around “critical technology” and “macro growth shifts with multi-year tailwinds” such as Industry 4.0; next-generation semiconductors; cloud and/or edge computing, AI, medical life sciences; supply chain resilience for advanced engineering.
NTAA’s executive chairman and CEO is Loke Wai San, who is also the co-founder and managing partner at Novo Tellus. Keith Toh, NTAA’s executive director and president, is also a partner at Novo Tellus, while Irwin Lim, NTAA’s CFO, is concurrently operating partner and CFO at Novo Tellus.
Besides Loke and Toh, there are three independent directors (IDs) on the board. The lead ID is Lim Puay Koon, who was CEO (North Asia) at Dimension Data Asia Pacific. The second ID is Chok Yean Hung, who was with semiconductor companies such as Texas Instruments; UTAC, and EEMS Asia (previously known as Ellipsiz Test Singapore). The third ID is Heng Su-Ling Mae, is now an ID with other Singapore-listed companies HRnetGroup; Chuan Hup Holdings; Ossia International and Grand Venture Technology.
Novo Tellus is known for its investments in Singapore-listed technology companies such as AEM Holdings; ISDN Holdings; Procurri Corp and Grand Venture Technology.
As described in its draft prospectus, NTAA offers a “distinctive opportunity” to invest alongside one of funds managed by Novo Tellus, PE Fund 2, that has a “clear, repeated track record of successful investments in technology and industrial companies”.
Similar to VTAC, NTAA has secured 13 cornerstone investors to take up 16 million units worth $80 million. They include Venezio Investments, which is also a cornerstone investor in VTAC. Other investors include DBS Bank; DBS Bank (Hong Kong) and UBS Asset Management.
The cornerstone investors also include Malaysia-based fund managers Affin Hwang Asset Management and Fortress Capital Asset Management. Local investment managers that are similarly on board include KSC (S); Maxi-Harvest Group, owned by Lee Sai Sing; Target Asset Management, run by Teng Ngiek Lian; and Heritas Capital Management.
Several prominent individuals are roped in as cornerstone investors too: Alan Wang of Asdew Acquisitions; Gerald Oh of Intuitive Capital; and Ronald Ooi, former chairman and CEO of Kim Eng Holdings.
Credit Suisse and DBS are the joint issue managers, joint bookrunners, and joint underwriters. CGS-CIMB is the co-manager for this IPO.
Photo: Vertex Holdings
