Will Pegasus Asia be Singapore’s first SPAC to make an acquisition?

What happened?

According to Bloomberg, Pegasus Asia is the leading contender to bring Kacific Broadband Satellites to go public via through a special purpose acquisition company (SPAC) merger. 

You would probably not have heard about Kacific previously, so we thought it might be helpful to give a quick summary of what it does. 

If you need an introduction to Pegasus Asia, do read our earlier writeup on the SPAC.

Kacific is a satellite operator which provides high-speed internet access to governments and businesses across 25 countries in Southeast Asia and the Pacific, based on its website. 

The company is headquartered in Singapore and wants to bring affordable broadband internet to remote regions of the world. 

This might be why its main operations is in Vanuatu, a group of islands close to Australia. 

Here are some other things we found from its website.

Lee Hsien Yang sits on its board as a non-executive director. 

Some of the partners that it has worked with include Singapore’s ST Engineering, as well as Boeing and SpaceX (Its satellite Kacific1 was launched into orbit by SpaceX in 2019).

Kacific claims that it realized positive Earnings Before Taxes, Depreciation and Amortization (EBITDA) in April 2021. The company further projected revenue growth of 130% in 2022 and 36% percent in 2023.

What does this mean?

According to the same Bloomberg article, Pegasus Asia was able to go into exclusive negotiations with Kacific because of the background of its sponsors and its location in Singapore. 

Bloomberg further reported that the potential partner will have a few weeks to conduct due diligence and finalise a deal.

Of course, it is important to note that this is just based on a press report, and we should not be investing based on speculation. 

In the same article, it was noted that a representative for Kacific responded to a request for comment on several details by calling it “inaccurate,” but did not elaborate further. 

Also, all the terms of the transaction including valuation are preliminary, and the talks could still breakdown. 

Why should we care?

Source: Google

Interest in SPACs in the US has come down over the past year due to weaker market conditions and rising risks of a regulatory clampdown. 

In Singapore, there has not been much trading activity in the SPACs listed here as investors await updates about their potential business acquisitions. 

All 3 of the SPAC shares traded at between S$4.70-4.80 as of the market close on 10 June 2022. 

The warrants associated with the SPACs last traded at a range of S$0.10-$0.20 with relatively low volume.  

Adding the price of the SPAC shares and 0.3-0.5 units of associated warrants would get us to a total value that is below the S$5 listing price of the SPAC units (before they were detached into SPAC shares and warrants). 

If you are an investor in Singapore SPACs, do watch out this space closely as we await an announcement on the first SPAC merger in Singapore.