Malaysia to review Spacs rules to profit from blockbuster deals

KUALA LUMPUR (BLOOMBERG) - Malaysia is reviewing its framework for special purpose acquisition companies, or Spacs, amid a surge in demand for such fund-raising vehicles globally, according to the nation's markets regulator.

The move comes weeks after Singapore and Hong Kong recently introduced rules for blank-cheque companies to list in Asia's main financial hubs. The two stock exchanges are upping efforts to draw new listings amid a rise in the number of unicorns in the region.

The popularity of blank-cheque companies, which raise money from investors with a plan to acquire another company, has exploded over the past year as they offer businesses a quick route to a listing. In Asia, Malaysia's AirAsia Group is exploring the possibility of listing its AirAsia Digital or AirAsia SuperApp in the United States this year.

The review is part of the Securities Commission's five-year plan, which aims to make Malaysian markets more relevant and efficient and is being conducted "amid developments in other markets", according to a technical briefing conducted by the commission on Monday (Sept 20).

Still, the commission said it would take a cautious approach to Spacs as the framework set by other market regulators may not be "directly transportable" to the Malaysian market.

While 524 firms globally have raised US$133 billion (S$179.6 billion) this year via Spacs, according to data compiled by Bloomberg, the pace of listings has slowed with the US market regulator tightening disclosure norms. Asian Spacs have raised US$4.33 billion this year, surpassing the tally from such deals in 2020.

Malaysia launched its first Spac in 2011, with the listing of Hibiscus Petroleum. The shares of the oil and gas company have risen about 8 per cent this year, compared with the 6 per cent decline in the nation's main equities index.

Separately, Finance Minister Tengku Zafrul Abdul Aziz said the Dana Penjana Nasional programme has invested in another unicorn, Xendit. The fintech start-up plans to relocate its financial hub to Malaysia, he said at the launch of the capital market master plan on Tuesday.

The Dana Penjana Nasional scheme is a matching fund-of-funds plan under Malaysia's Short-Term Economic Recovery Plan. It previously invested in Carsome Group, which runs an online platform for buying and selling used cars.

Other highlights from the master plan:

• The regulator will streamline the listing process, expand the pool of principal advisers to cater to small- and mid-cap companies

• Explore alternatives for small and medium-sized enterprises and mid-tier companies to tap public markets

• Consider introducing mechanisms to allow credit enhancements for mid-tier firms or credit hedging for investors