Who could Singapore's first SPAC merge with
1. Singapore's first ever SPAC, Vertex Technology Acquisition Corp (VTAC), has closed its IPO subscription as of 19 Jan 2022. Only $3m worth of units were offered to the public and it was 36x oversubscribed. I didn't get any.
2. It will start trading on 20 Jan 2022 from 2pm onwards. I believe it will trade above $5 given the popularity of this issue.
3. The next step is for VTAC to find an acquisition target and merge. I believe there are a handful of targets being identified already and I would make some speculations here.
4. First, I think the target company must be at least a SGD unicorn. This is because VTAC is a $200m SPAC and SPACs usually take a non-controlling stake in the target company. If it is a 20% stake, the target must be at least $1b in valuation.
5. For reference, Altimeter Growth Corp invested US$575m and PIPE investors threw in another US$3.265b for Grab with almost $40b valuation. That is almost 10% stake for the new investors.
6. Second, I believe it should be a prominent (likely B2C) local tech company considering that there is a possible purpose of rejuvenating and drawing investors into our local bourse. It isn't nice to see our local tech companies listing overseas and merging with an overseas target may turn out to be unfamiliar to local investors. Hence, the target has to be something close to our hearts.
7. With the above considerations, here are some potential targets I can think of.
8. Ninja Van is valued above US$1b in the last funding round in Sep 2021.
9. Carousell is valued at US$1.1b and although it is in talks to merge with a US-listed SPAC, I think there's still a chance for VTAC to convince them.
10. Carro hit the unicorn status since Jun 2021 funding round. CEO has signalled to IPO in 18 to 24 months since then.
11. ONE Championship is at US$1.2b valuation in Dec 2021 funding round. They are considering a SPAC merger in the US too.
12. Secret Lab was reportedly worth US$1.5b valuation in Jun 2021. But they have pretty much grown organically and only raised a small S$10m round once. So I think they can afford to IPO by themselves if they want to.
13. Other Singapore unicorn companies include PatSnap, NIUM, HyalRoute, Advance Intelligence Group, Trax, Moglix, Matrixport and bolttech. These are possible targets too but they are less well-known among the masses.
14. Another possible group could be those startups that are sub-unicorn status but the SPAC merger can push the valuations to around US$1b (valuation is an art). One good example is ShopBack (US$539m).
15. VTAC has 24 months to find a target to merge and I believe it won't take that long. We may just get the announcement few months down the road. Let's see.
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Great Article