Asian bourses look to join Spacs craze despite governance concerns

Asian bourses look to join Spacs craze despite governance concerns

The Indonesia Stock Exchange has become the third Asian bourse, after Hong Kong and Singapore, to explore allowing special purpose acquisition vehicles, prompting concerns about investor protection as Wall Street's mania for the vehicles extends to the region.

Investors have poured almost $3bn into Spacs focused on acquiring Asian companies this year, nearly doubling the amount committed during all of 2020, according to Dealogic.

Last year, there was only one Spac deal involving a company based in an Asian country, and just five successful listings of Asian start-ups via Spacs in the past five years.

The rush for targets from a widening pool of investor cash has prompted concerns among some sponsors about inflated valuations for young companies, where management teams may be unprepared for the regulatory requirements of a US listing.

It has also come despite efforts by Asian bourses to tighten restrictions to block backdoor listings and other deals that avoid the strict independent due diligence required of a traditional IPO.

"Everyone is chasing the same deals,“ said Frank Troise, chief executive of SoHo Advisors, a boutique US investment bank. "In some cases, there are 12 to 15 sponsors chasing one target.“

Spacs raise money by listing on a stock exchange and then using