➤ New York Stock Exchange LLC aims to maintain its position as a special purpose acquisition company hub, offering higher market depth and liquidity.
➤ The exchange is looking to attract more Asian companies to list in the U.S.
➤ IPO pipeline from Asia predominantly comprises technology and consumer companies.
NYSE's head of international capital markets Alex Ibrahim.
The New York Stock Exchange, which has seen a flurry of listings by special purpose acquisition companies in recent quarters, expects to attract more Asian companies to take the SPAC route to list in the U.S.
Toward the end of 2020, a number of Asia-headquartered SPAC listings took off on the U.S. exchange. The popularity of SPAC IPOs has prompted Singapore and Hong Kong exchanges to evaluate whether to allow the listings of such skeleton organizations that raise money from investors with the goal to acquire a company and subsequently take it public.
The relatively deeper market in the U.S. will continue to drive SPACs from Asia and other parts of the world to seek listing on the NYSE, Alex Ibrahim, head of international capital markets at the bourse operator, told S&P Global Market Intelligence in an interview.
NYSE, the world's biggest exchange by market capitalization of companies listed on it, is also looking to deepen its relationship with Asia-based companies, aiming to bring them to New York to either debut or pursue a secondary listing. It recently had South Korea's e-commerce company Coupang Inc. ring the market bell, which has been the second-largest non-U.S. IPO on the exchange. Chinese software company Tuya Inc. also listed on the NYSE this month.
The following is an edited transcript of the interview.
S&P Global Market Intelligence: If Singapore and Hong Kong exchanges allow SPAC listings, will it reduce the attractiveness of NYSE for Asian companies?
Alex Ibrahim: Last year, the majority of SPACs that actually listed were U.S.-based. Towards the end of the year, we were starting to see some movement in other parts, like Israel and Asia-Pacific. We have an incredible pipeline of SPACs coming from Hong Kong and Singapore.
I think the other markets, because they see the success of the SPACs here in the U.S., are creating rules to attract local SPACs. The benefit of being in the U.S. is because of the depth of this market. There's so much liquidity here, so much money that those portfolio managers or sponsors can tap into. So the U.S. market will continue to be the destination not only from U.S.-based SPACs, but also SPACs based outside the U.S.
The SPAC route has the potential for abuse as companies can be listed at an unreasonable premium, or be used to fund inferior quality companies. Could that affect the popularity of future SPAC IPOs?
We're seeing that the companies that are being acquired by a SPAC are extremely high quality. I think this will continue because there are quite a few companies all over the world that are getting ready for an IPO or a potential M&A transaction. At the NYSE, our listing standards are very high. So, we're a little picky as we're the largest exchange in the world. We monitor those companies not only on listing day but ongoing.
What would you tell the other exchanges considering jumping on the SPAC bandwagon?
They should be looking at their local market to see if there is an opportunity. Here in the U.S., SPACs has become the key product in the U.S. capital market alongside IPOs. We see participation not only from the very large institutional investors but also retail. So, there's a huge appetite.
How important is attracting Asia-headquartered companies to list on the NYSE?
We're very excited about the whole region, including China. We have a team on the ground in Beijing. Our person based in Hong Kong actually was responsible for bringing in Coupang, the second-largest international non-U.S. IPO since Alibaba Group Holding Ltd.
Outside China, we're starting to see a lot of movement in Southeast Asia, namely Singapore, Indonesia and Malaysia, especially in the tech space. Recently, we're also starting to see movement from South Korea. There are quite a few companies that will want to follow the successful transaction that Coupang had in the U.S. capital markets. You see the performance, the visibility the NYSE provided to Coupang. Companies are looking at, eventually, to tap the U.S. market or even do a dual listing in Seoul and New York.
You mentioned tech firms — are those the kinds of companies NYSE is looking to attract?
The sector that has really been represented in IPOs in the U.S. or globally is technology. The pipeline is extremely tech-focused and even consumer to certain degree. We are working with some consumer companies in the Asia region that could tap to the U.S. market in the near future.
How worried is NYSE about losing business from Chinese companies following the restrictions imposed by the U.S., which has forced several firms to consider listing in Hong Kong?
Companies that have been traded in U.S. for a long time, like Baidu, want to have a secondary listing in Hong Kong. I think it's very healthy, because in the U.S., you really focus in the global investor base, but not the Chinese investors. Listing in Hong Kong can bring in those Chinese funds to trade on the Hong Kong Stock Exchange. At the end of the day, they create two pools of liquidity that are very deep for those companies. I think we're going to see more and more Chinese companies that are listed in the U.S., eventually having a secondary listing in Hong Kong.
What are your priorities for Asia-Pacific?
Our strategy is really to work with entrepreneurs, their investors, their advisers, and explain the benefit of being a publicly traded company and looking to the U.S. capital markets, like, look at the depth, look at the type of investors that we have here. It's an educational process. The U.S. market is very deep, has huge appetite, and is looking for diversification. Asia, with the exception of China, is not very well represented yet on the U.S. exchanges. They can also create diversification by listing in the U.S. with their shareholder base. We can also provide them with global visibility, such as that for Coupang, that can be very important to companies in Asia that want to be seen as global players.