VERTEX Technology Acquisition Corp : VT1 0%&rsquo s (VTAC) shareholders will redeem close to two-thirds of the share capital of the special-purpose acquisition company (Spac), it said on Friday (Dec 1).

 

These shareholders have exercised their redemption right for some 26 million shares as at the redemption record date, which amounts to about 62.53 per cent of the company&rsquo s issued share capital of 41.6 million shares.

 

Excluding the holdings from two VTAC shareholders &ndash Vertex Co-Investment Fund (Vertex SPV) and Venezio Investment &ndash who had committed not to redeem their shares, the redemption rate would be 87.9 per cent. These entities collectively held 12 million shares.

 

VTAC&rsquo s sponsor Vertex Venture Holdings and Venezio are Temasek-linked entities.

 

Apart from Vertex SPV and Venezio, the other entity that had a substantial direct interest in VTAC was Income Insurance, which held 2.6 million shares.

 

Fullerton Fund Management, an indirect subsidiary of Temasek, had entered into a cornerstone agreement with VTAC during the initial public offering (IPO). Income Insurance, a client of Fullerton, was the registered holder of the shares.

 

If all the holdings by Temasek-linked entities are excluded from the calculation &ndash and assuming Income Insurance was also not among the redeeming shares &ndash the redemption rate goes up to 96.3 per cent.

 

The high redemption rates from independent shareholders are in line with recommendations from research houses that assessed the merits of the deal.

 

Last month, Phillip Securities recommended that investors fully redeem their shares in VTAC at the redemption price range of S$5 to S$5.02.

 

The research house, which was appointed by the Securities Investors Association (Singapore) or Sias to provide independent research, noted that revenue for 17Live has been declining since 2021, dragged by falling active users and weaker average spending.

 

It added that financial targets for the issuance of earnout shares include Ebitda (earnings before interest, taxes, depreciation and amortisation) declining an estimated 14 per cent on year in the second half of 2023, and total revenue declining 12 per cent on year in FY 2023.

 

Research firm Beansprout, also appointed by Sias, recommended that shareholders redeem and sell their warrants as well, as the acquisition value appeared high, and near-term prospects were muted.

 

Apart from capital from non-redeeming shareholders, the Spac also has new private investment in public equity (Pipe) investors entering at the business-combination stage.

 

Last month, VTAC announced that it will raise a Pipe round to raise some S$3 million in gross proceeds. The S$3 million raised is less than earlier illustrations for S$10 million in Pipe financing, when the deal with 17Live was first announced.

 

The Spac&rsquo s shareholders are due to meet at 2 pm on Friday to vote on the business combination with e-commerce streaming company 17Live. If the proposed combination does not pass, the redemption requests will be cancelled, VTAC noted.

 

It said that non-redeeming shareholders who hold the remaining 15.6 million shares in the Spac will be entitled to additional warrants. Excluding Vertex SPV, those who hold the remaining 9.6 million shares as at the record date will be entitled to special bonus NRS shares.

 

To minimise dilution arising from the executive incentive scheme and the special bonus scheme, the sponsor agreed to waive its right to the allotment and issuance of 6.3 million promote shares to Vertex SPV.

 

The maximum number of promote shares the sponsor is entitled to before Apr 30, 2026, stands at 6.8 million shares, based on the level of redemption, VTAC said.

 

The Spac suspended the trading of its shares on Nov 28. Its counter last traded at S$4.79 on Nov 24.

The merger requires careful due diligence by investors who need to understand the de-Spac process and be mindful of risks

 

VERTEX Technology Acquisition Corp (VTAC), Singapore&rsquo s pioneering special purpose acquisition company (Spac), announced its intention to merge with 17Live Holding Ltd (17Live) and acquire all issued share capital of 17Live Inc. This charts a significant development in the Spac landscape.

 

As Singapore&rsquo s first Spac, VTAC made its market debut on 20 January 2022 amid a global interest in blank-cheque companies. With an initial public offering (IPO) price set at S$5 per share, it succeeded in raising S$208 million in gross proceeds. IPO participants received one ordinary share plus a fraction of a warrant per share.

 

This article aims to share vital considerations for retail investors who have engaged with VTAC from its IPO and those considering participation, especially in light of guidelines highlighted by the Singapore Exchange (SGX) and CFA Institute.

 

Overview of the business combination

According to a VTAC&rsquo s press release in October, 17Live is the leading live streaming platform by revenue in Japan and Taiwan, and is poised for growth with multiple drivers, including an innovative &ldquo V-live&rdquo category and an expanding repertoire of live commerce and in-app games. Despite recording a significant profit in FY2021, 17Live incurred losses in FY2022.

 

VTAC has endorsed the merger, citing 17Live&rsquo s strong management, the potential for scale, and its alignment with Vertex Holdings&rsquo areas of expertise.

 

Vertex Spac is slated to convene an extraordinary general meeting (EGM) to deliberate over this proposed business combination. Notably, 17Live has opted to roll over their equity, indicating a strong belief in the merged entity&rsquo s future.

 

Retail investors with VTAC shares from IPO

Since the IPO, VTAC&rsquo s share price has fluctuated less than the volatility experienced by Spacs in other markets. The daily transaction volume has seldom breached the 100,000 mark, indicative of a relatively steady interest from the market. With the acquisition announcement, existing investors have the following options:

 

Buy more shares: An opportunity to augment your holdings is presented with additional share allotment for new subscriptions.

Hold existing shares: In this particular transaction, holding onto your shares will automatically entitle you to additional shares as the merger progresses.

Exercise warrants: As the current share price trades below the warrant exercise price, it is imperative to assess the long-term value proposition before opting to exercise the warrants.

Sell existing shares: The stock market provides an exit option, albeit the price to some investors may not be as favourable as expected.

Redeem shares for cash: Redemption offers a way to recoup your investment, although the exact amount may vary and is subject to the escrow account balance and applicable deductions.

For existing investors who choose to redeem shares for cash, it is imperative to know one&rsquo s rights and the deadline for redemption. Typically, the redemption process allows existing investors to recover their invested capital with a small interest, and you can still vote in favour of the merger despite your intention to redeem shares.

 

Due diligence considerations

When deliberating whether to redeem your shares or further invest in a Spac, conducting thorough due diligence is crucial. Here is a non-exhaustive list of key considerations:

 

Understand the target company. Investors should understand what are its financials, market position, growth potential and risks. A deep dive into the company&rsquo s business model, leadership team and strategic plans can provide a clearer picture of its prospects.

Evaluate the expertise of the sponsor. Is the sponsor an expert specifically in relation to the business sector of the target company? A sponsor with relevant industry knowledge and connections is more likely to steer the company towards success.

Investigate the share sale restriction duration for the sponsor and other anchor investors. Commonly referred to as the lock-up period, this is indicative of the sponsor and other anchor investors&rsquo commitment to the company&rsquo s long-term performance. These terms can signal investor confidence in the company&rsquo s value proposition.

Scrutinise the sponsor&rsquo s track record. This includes the sponsor&rsquo s history in terms of operational management, mergers and acquisitions, and previous Spac ventures. A sponsor with a strong track record can be a positive sign, whereas one with a history of underperformance might warrant caution.

Taking the time to review these areas can help inform a more secure investment decision, ensuring that you are well-acquainted with both the potential rewards and inherent risks.

 

The VTAC and 17Live merger, while laden with potential, requires careful navigation by investors. Understanding the details of the de-Spac process, recognising the risks and considering the redemption option against holding shares post-merger are critical for informed decision-making.

 

Investors are encouraged to consult the SGX Investor Portal for detailed Spac share and warrant counts post-detachment the CFA Institute Spac Crib Sheet documentation (to understand the key structural, risk and conflict issues) and familiarise themselves with their rights regarding redemption and voting in the upcoming EGM.

 

The move is subject to the completion of its proposed business combination with live-streaming operator 17Live, the special purpose acquisition company says. 

 

VERTEX : VT1 -0.2% Technology Acquisition Corporation : VT1 -0.2% (VTAC) on Tuesday (Nov 21) said it will issue 600,000 new shares at S$5 apiece to private investment in public equity (Pipe) investors to raise some S$3 million in gross proceeds.

 

The move is subject to the completion of its proposed business combination with live-streaming operator 17Live, the special purpose acquisition company (Spac) said.

 

The S$3 million raised is less than earlier illustrations for S$10 million in Pipe financing, when the deal with 17Live was first announced.

 

Spacs typically raise a Pipe round during their business combinations for additional capital, which could also be useful if initial public offering (IPO) investors decide to redeem their capital.

 

The participation of Pipe investors at the business combination stage can also serve as validation for the valuation of a target company, as such investors would typically carry out their own due diligence.

 

VTAC currently has S$208 million in its escrow account, which was raised during its IPO in 2022.

 

The blank cheque company said earlier this month that it had drawn down S$10.4 million in interest earned from the funds in the escrow account to cover costs and other expenses.

 

Apart from S$60 million, which was invested by the sponsor and another Temasek-related entity Venezio, the amount in the escrow account can be redeemed by investors who do not wish to stay invested in 17Live.

 

Assuming no redemption, the gross proceeds due to the enlarged group from the escrow account and the Pipe issuance would be S$211 million.

 

If there were maximum redemption, the gross proceeds would fall to just S$63 million.

 

Phillip Securities Research on Monday (Nov 20) recommended shareholders to fully redeem their shares at the redemption price range of S$5 to S$5.02.

 

The research house &ndash which was appointed by the Securities Investors Association (Singapore) or Sias to provide independent research &ndash noted that revenue for 17Live has been declining since 2021, dragged by falling active users and weaker average spending.

 

It added that financial targets for the issuance of earnout shares include earnings before interest depreciation and amortisation declining an estimated 14 per cent on year in the second half of 2023, and total revenue declining 12 per cent on year in FY23.

 

Under SGX listing rules, mainboard companies are required to have at least 500 public shareholders.

 

In response to BT queries on whether any waivers may be granted if a Spac faces substantial redemptions, an SGX Group spokesperson noted that the float of the resulting issuer would be based on non-redeeming shareholders, 17Live shareholders as well as restricted share units (RSU) holders.

 

VTAC had 1,071 shareholders based on its annual report in March, while 17Live had 846 employees as at Jun 30, although not all of these are recipients of RSUs.

 

&ldquo As disclosed in VTAC&rsquo s circular, the company will be monitoring the level of redemptions and will announce the total number of redeeming shares at the EGM,&rdquo the spokesperson added.

 

The Pipe issue price of S$5 per share &ndash similar to the IPO price &ndash represents a 1.2 per cent premium to VTAC&rsquo s volume weighted average price of S$4.9394 per share for trades done on Monday.

 

Under its special bonus scheme, 0.1 new VTAC share will also be issued to Pipe investors for every base Pipe share subscribed for, upon the Spac&rsquo s completion of its proposed business combination with 17Live. Non-redeeming shareholders of VTAC would also be a part of the special bonus scheme, and receive the special bonus shares.

 

VTAC has engaged DBS and UBS Singapore as joint placement agents. As the Pipe placement is not underwritten, no prospectus or offer information statement will be issued by the company or lodged with the Monetary Authority of Singapore.

 

As the Dec 1 extraordinary general meeting (EGM) for Vertex Technology Acquisition Corp (VTAC) VT1 -0.6% draws near, its target company &mdash pure-play live-streaming platform 17LIVE &mdash has ramped up on showcasing the company&rsquo s creator-focused business model. Besides webinars and online demos, it also organised its first offline event in Singapore on Nov 20th, featuring some of its top live-streamers and virtual performers.

 

There will be two possible outcomes following the EGM. First, if shareholders vote in favour of the proposed transactions and the business combination is approved, the resulting entity will trade under the new name &ldquo 17LIVE Group&rdquo on the Singapore Exchange S68 0.95% on Dec 8. Redeeming shareholders will receive a redemption price of no less than $5 per share.

 

If shareholders vote against the proposed transactions, the business combination will not be completed. All redemption requests will be cancelled and VTAC will be liquidated. Those who want to redeem money put in at the time of the IPO two years ago need to submit their redemption form by Nov 28.

 

The proposed business combination entails a consideration of up to $922.9 million. This consists of $800.8 million worth of consideration shares and up to $122 million in earn-out shares. Depending on the redemption amount by VTAC&rsquo s existing shareholders, the proposed business combination will value the enlarged group at a pro forma equity value of between $999.6 million and $1.16 billion. 

 

The amount comprises the purchase consideration, the cash in VTAC&rsquo s escrow account of between $60 million and $208 million, proceeds from the private investment in public equity (Pipe) financing of $10 million and the special bonus scheme amount of between $4 million to $18.8 million. The special bonus scheme refers to the allotment and issuance of 0.1 new shares to non-redeeming shareholders as well as Pipe investors. 

 

Trading of VTAC shares will be suspended from Nov 28 till Dec 4. Should all resolutions be approved at the EGM on Dec 1, Dec 8 is expected to be the completion date for the company to start trading as 17LIVE Group. On the same day, those who have submitted a redemption request will receive their payment while those who did not do so will receive their bonus shares. 

 

Analyst recommendations

 

What will be the shareholders&rsquo decision on Dec 1? While it is still unclear, PhillipCapital in its Nov 19 report recommends shareholders to vote in favour of the proposed acquisition and fully redeem their shares at the redemption price range of $5 to $5.02 per share.

 

Based on price to sales and EV/Ebitda relative multiple of listed peers, PhillipCapital derives a fair value of 17LIVE between US$581 million and US$700 million and when equally weighing the importance of sales and earnings plus balance sheet strength, the fair value is US$641 million. Assuming no redemption of shares, PhillipCapital&rsquo s fair value of VTAC post-acquisition is $5.08. Should the earnout shares be fully issued, the team&rsquo s fair value declines to $4.55.

 

&ldquo We believe the purchase cost of the shares issued to the vendors of 17LIVE, promote shares and earnouts shares are significantly lower than the redemption price range. Based on our current fair value, we view the warrants as out of money and there is a risk it can expire at zero value,&rdquo adds PhillipCapital, one of the brokers appointed and paid by the investors&rsquo watchdog Securities Investors Association Singapore (SIAS) to provide independent research on VTAC&rsquo s de-spac.

 

Investment advisory firm Beansprout, which is similarly appointed by SIAS, is recommending shareholders redeem their VTAC shares and sell their warrants. The advisory firm is valuing the 100% equity stake in 17LIVE at US$460 million, below the purchase consideration of up to $922.9 million, says Beansprout&rsquo s founder and CEO Gerald Wong.

 

From Wong&rsquo s perspective, 17LIVE&rsquo s near-term prospects appear to be muted &mdash the platform&rsquo s monthly active user (MAU) has declined from 2HFY2021 following the lifting of pandemic restrictions. Additionally, the average revenue per spending user remains under pressure as users return to more offline entertainment. 

 

&ldquo These headwinds have more than offset initiatives by management to drive higher user engagement. Other key risks include rising competitive threats, inability to retain streamers, and regulatory risks,&rdquo he adds.

 

Shareholders&rsquo concerns

 

Aside from questions on the sustainability of live-streaming demand on the back of post-pandemic consumer shift, there are questions regarding intense competition and post-transaction plans the company has. This is because the recently penetrated Southeast Asian market is generally unfamiliar with the live-streaming industry.

 

An independent market report prepared by Frost & Sullivan for 17LIVE addresses the decreasing screen time and declining entertainment expenditure in the wake of the pandemic. In Japan, where 17LIVE is based, the pandemic created favourable conditions for the interactive video streaming market&rsquo s rapid expansion with a market growth rate of 55% y-o-y on average between 2019 and 2022. However, Frost & Sullivan anticipates that the growth rate will &ldquo stabilise&rdquo although the market size would remain substantial.

 

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In Taiwan, one of 17LIVE&rsquo s main markets, consumers are spending less time-consuming digital content with the pandemic wearing out &mdash daily internet usage has decreased from 2022 levels, presumably leading to a potential decline in live-streaming consumption. The notable decline in entertainment expenditure from 9.53% in 2019 to 6.43% in 2021 is a challenge to the revenue sustainability of interactive video streaming platforms. 

 

While interactive video streaming is gathering steam in Southeast Asia, Frost & Sullivan notes that the model of virtual gifting observed in Northeast Asian countries will not be sustained in the region. This is due to the lack of super-spending users who are willing to splurge on expensive virtual gifts for their favourite streamers. The researchers also believe that the influence of the pandemic on online viewership and spending in Southeast Asia will decrease as the region moves closer to a state of normalcy and gradually returns to pre-pandemic patterns.

 

Nonetheless, 17LIVE thinks it has a lot more space to grow. 17LIVE cofounder and group CTO Ng Jing Shen highlights that from 2023 to 2027, live-streaming in Japan is projected to grow at a CAGR of 22%. V-Liver &mdash 17LIVE&rsquo s primary growth driver moving forward &mdash is expected to grow at 41.2% during the forecast period, while live commerce is expected to have a growth rate of 43.6%. V-Liver refers to live-streamers who choose to appear on screen as animated avatars with the help of motion capture technology. 

 

&ldquo Beyond growing in Japan and Taiwan, where we are market leaders, we also think there are many opportunities for market geographical expansion. The big reason why we are listing in Singapore is because we see it as a great launchpad for Southeast Asia where we see the live-streaming industry is forecasted to grow by a CAGR of about 20% in the next five years. Beyond Asia, we see quite interesting global opportunities for V-Liver in the US as well,&rdquo says Ng.

 

According to Frost & Sullivan, the market size for live-streaming in Southeast Asia is expected to increase from US$1 billion in 2023 to US$2.1 billion in 2027, representing a CAGR of approximately 19.2%. To tap on what it expects to be a fast-growing live-streaming market, 17LIVE plans to expand by acquiring more live-streamers and users in Southeast Asia as well as collaborating with media and entertainment companies in the region, among others.

 

17LIVE believes it has a different proposition from the competition in Japan and Taiwan. According to co-founder Joseph Phua, aside from providing creators with all the tools required to succeed, the platform also has contracts spanning between one and seven years with over 87,000 live-streamers to create exclusive content. 

 

Another competitive advantage is that 17LIVE has an in-house talent management team instead of working with external agencies, setting it apart from other popular platforms across Asia. &ldquo This is a very impenetrable moat and is why we have been able to grow leaps and bounds across the last five to six years. Working with agencies means having little bargaining power, heavily impacting margins. We can secure strong margins as we control and work directly with the creators,&rdquo says Phua.

 

Next growth driver

 

17LIVE&rsquo s financial performance is also at the top of mind for shareholders, especially as its operating revenue in 1HFY2023 ended June fell by 24.65% y-o-y to US$151 million. The company posted a loss of US$118.2 million for the period, compared to US$42 million for the previous corresponding period. However, adjusted profit after including revaluation loss stood at US$9.4 million.

 

Phua highlights the company&rsquo s adjusted ebitda, which surged to US$15.8 million in 1HFY2023 compared to US$4.3 million in 1HFY2022. Against the challenging operating environment, Phua says the company has performed relatively well. 

 

&ldquo I have also been reading the news recently on the quarterly earnings of many of our competitors and other players in the market, yet I have not come across similar stellar results that we have put forward. Given our size and the region we are operating in, I think 17LIVE is quite a strong-performing company,&rdquo says Phua.

 

He also stresses the boom of V-Livers, which the company has identified as its primary growth driver moving forward. 17LIVE introduced V-Liver content in 2018, eventually becoming a focus for the company&rsquo s business growth plans in 2022. 

 

In April 2023, 17LIVE officially integrated the Live2D functions into its broadcasting functionality. This allows users to use their smartphones to upload an avatar and conduct virtual streaming without additional hardware or software &mdash thereby significantly lowering the barriers to becoming a V-Liver. 

 

Following the integration of Live2D functions, the marketing of its proprietary IP called Bushilive, and offline V-Liver events, the company saw significant growth in its V-Liver business. In 2QFY2023, its V-Liver monthly active streamer grew 6.5 times y-o-y, while the average V-Liver MAU grew by 2.1 times. The average monthly V-Liver spend, on the other hand, grew by 2.7 times. Next, 17LIVE has enhanced its broadcasting functionalities, integrating more advanced 3D and hand gesture recognition features. 

 

In their research, Frost & Sullivan expects V-Livers to achieve significant growth in the upcoming decade, particularly in China and Japan, with Taiwan likely to benefit from a spillover effect. This growth will likely generate new marketing and advertising opportunities as brands recognise V-Livers as valuable collaborators that offer improved access to the target demographic of 16 to 23-year-olds.

 

Reiterating the market size, Phua believes that the market has yet to value the V-Liver industry fully and is very optimistic about harnessing this creator economy. 

As SGX&rsquo s first de-Spac deal nears, the question is whether investors will stay on 

THE Singapore Exchange (SGX) is set for its first mainboard listing via a special purpose acquisition company (Spac) business combination, with Vertex Technology Acquisition Corp&rsquo s (VTAC) proposed merger with livestreaming operator 17LIVE.

 

Coming two years after rules for the alternative listing route were unveiled, shareholders of VTAC : VT1 +0.21% now have two important decisions to make. They now have to decide whether to exercise their redemption rights and whether to vote in favour of the business combination at the upcoming extraordinary general meeting (EGM).

 

Independent shareholders have little incentive to vote against a business combination, as they can redeem their pro-rata share of the escrow account regardless of how they voted. The more interesting thing to watch for is how many shareholders actually put their money where their mouth is, and stay invested in the listed company after the de-Spac.

 

Alignment of interest

To the sponsor&rsquo s credit, various steps have been taken through the Spac&rsquo s life to demonstrate alignment of interest with investors.

 

During the initial public offering (IPO), Vertex Venture Holdings and another Temasek-related entity, Venezio Investments, demonstrated significant commitment by investing S$60 million in the Spac which is non-redeemable.

 

The sponsor also incorporated a time-based and price-based vesting structure for its promote shares, with allotment at various milestones to mitigate concerns over dilution.

 

When the business combination was announced, VTAC went a step further and said that it is offering a special bonus scheme to non-redeeming shareholders and private investment in public equity (PIPE) investors. This essentially gives such investors 10 per cent more shares in the company.

 

To support this and to reduce dilution to other shareholders, the sponsor will waive its rights to receive a &ldquo significant portion&rdquo of its promote.

 

Whether these steps are enough to convince independent investors to stay around remains to be seen.

 

Shares of VTAC popped higher after the proposed deal was announced, with the counter rising 2.7 per cent to S$4.94 per share. The shares have since fallen to around S$4.85 as at Oct 10.

 

Notably, the share price has not gone above S$5, which was VTAC&rsquo s IPO price, and the initial amount per share in the escrow account.

 

The special bonus scheme would give non-redeeming investors additional shares. But this also comes with uncertainty about how the market would value the stock once redemption rights are no longer available.

 

Financials and valuation

A key consideration for many investors would be the valuation of 17LIVE, which will determine whether this deal makes sense for them.

 

17LIVE operates in markets including Japan and Taiwan, where it has significant market share. It unsuccessfully attempted to list on the New York Stock Exchange back in 2018 &ndash when it was still known as M17 Entertainment.

 

In a press release, VTAC said that it is acquiring the live streaming platform for a consideration of up to S$925.1 million. This includes S$122 million of earnouts, which are subject to satisfaction of certain financial targets.

 

The consideration compares to the target group&rsquo s adjusted net profit of US$4.9 million and earnings before interest taxes, depreciation and amortisation (Ebitda) of US$15 million in FY2022. The target group had total equity of negative US$183.2 million.

 

When asked about the valuation multiples of the target, VTAC chief executive Jiang Honghui told The Business Times that more details would be disclosed in the EGM circular. He noted that comparable peers were used to arrive at its proposed valuation.

 

It isn&rsquo t uncommon for growth stocks to trade at rich valuations, but retail investors would likely want assurance that valuations are in line with norms. In the case of a Spac deal, a strong PIPE round may be helpful.

 

VTAC provided illustrations for a PIPE round of about S$10 million for its business combination. The final amount has not yet been determined, but the illustrated sum is significantly smaller than the over S$200 million currently in VTAC&rsquo s escrow account.

 

By comparison, Grab&rsquo s merger with the US$500 million Altimeter Spac in Dec 2021 had a US$4 billion PIPE. To be sure, market conditions were markedly different then. But the contrast is still stark.

 

A larger PIPE, with more institutional investors on board and willing to participate in the long-term success of the resulting issuer, could help to provide some form of validation on the valuation of the business combination transaction.

 

While SGX rules do not require an independent valuer to be appointed for a Spac deal if a PIPE is present, it raises the question of whether a relatively small PIPE provides sufficient checks and balances on the valuation.

 

An independent valuer should also be required in cases where the transaction involves related parties.

 

A number of Vertex funds that the sponsor has invested in are current shareholders of 17LIVE. While these funds are managed by independent general partners, it would still be preferred to have an independent party assess the valuation to assure and convince investors.

 

To redeem or not to redeem

Meanwhile, the resulting issuer will be required under SGX listing rules to meet the existing mainboard initial listing requirement, which requires a counter to have at least 500 public shareholders.

 

As at March this year, VTAC had 1,071 shareholders, putting it above the minimum requirements. But this could change if there is a substantial level of redemption.

 

It would be ideal for VTAC to indicate the level of redemptions the Spac can stomach before it falls below the minimum shareholder threshold.

 

SGX previously said that it would closely observe local developments and &ldquo be prepared to grant case-by-case waivers&rdquo of the 500 public shareholders requirement, if the resulting issuer can demonstrate sufficient bases and &ldquo genuine hardship&rdquo in complying at the point of business combination.

 

However, the market regulator should also indicate whether it is prepared to grant any waivers ahead of time, as investors will need to consider liquidity implications this may have on the resulting issuer.

 

Retail investors that hold VTAC shares should also study any independent analyses and consider the longer-term prospects of 17LIVE once more details are available in the circular. These will be critical in helping to decide whether or not to redeem their capital.