By Jing Yang

Singapore is trying to get a piece of the red-hot market for blank-check companies.

The Singapore Exchange started on Wednesday a four-week public consultation on special-purpose acquisition companies. These are publicly listed shell companies with ready pools of cash that seek to invest in--and merge with--private companies.

The vehicles have taken Wall Street by storm since last year and with SPACs not permitted on most Asian stock exchanges, investors and companies in the region have instead tapped into the U.S. boom. Magnates including Hong Kong billionaire Li Ka-shing and Chinese rainmakers Fred Hu and Fang Fenglei have raised their own SPACs this year.

Grab, a Southeast Asian ride-hailing giant, is in talks to go public via a U.S.-listed SPAC in a deal that could value that company at $40 billion, The Wall Street Journal reported.

"We have received inquiries from potential sponsors and market professionals on whether SGX would consider allowing SPACs," said Tan Boon Gin, chief executive of Singapore Exchange Regulation, the exchange's regulatory body. In a SPAC, a sponsor refers to the management team of the shell company that is tasked with finding another company, also known as a target, to merge with.

"The feedback is that an Asian SPAC would be of interest to investors and sponsors because it would be in the same time zone as the Asian targets, which themselves may also be more familiar to the investors here," Mr. Tan said in a media briefing.

SPACs seeking listings in Singapore would be required to have a minimum market capitalization of the equivalent of $226 million and would have three years to complete a merger, according to the proposed framework. The exchange is seeking public feedback until April 28.

The market-cap threshold is considerably higher than in the U.S., where the floors for listing on boards run by Nasdaq Stock Market and the New York Stock Exchange vary from $50 million to $100 million.

Mr. Tan said the higher market-cap requirement is intended to attract quality investors. "What we're looking for really is a sponsor with a proven, established track record in acquiring, managing and operating growth companies," he said.

Promoted as a fast and relatively hassle-free route to public markets, SPACs have stolen the thunder of initial public offerings. This year, 297 SPACs have listed in the U.S., raising a total of $97.2 billion, surpassing the whole of 2020, when 248 SPACs listed with $83.4 billion in total proceeds, according to data from SPAC Research.

Other markets are also reacting to the U.S. boom. The Hong Kong government has asked the city's securities regulator and exchange operator to explore listing programs, and the U.K. government is proposing changes to make its SPAC program more attractive to investors and companies.

The Singapore Exchange aims to introduce the SPAC framework by midyear and expects to have its first listing around then, Mr. Tan said. In 2010, it also consulted about allowing SPACs but didn't proceed because market conditions weren't ripe he said, without elaborating.

The exchange made several proposals that are meant to protect investors during the merger process. For example, shareholders would get as much information ahead of the deal as they would get in an IPO prospectus, and the resulting company would have to follow standard listing rules. In addition, only independent shareholders could vote on mergers, to limit the influence of sponsors.

Elsewhere in Asia, South Korea and Malaysia both allow SPAC listings. But the market response has been tepid. No SPAC was issued in South Korea last year, while in Malaysia the last SPAC listing was in 2014, according to Dealogic data.

(END) Dow Jones Newswires

03-31-21 0530ET