SINGAPORE – Southeast Asia’s late startups are seeing growing interest from blank check companies looking to go public, a venture investor told CNBC.
According to Vinnie Lauria, managing partner of early-stage venture capital firm Golden Gate Ventures, more than 40 SPACs – or specialty acquisition companies – are targeting the region.
“SPACs have really put ASEAN on the map,” Lauria said Thursday in CNBC’s Street Signs Asia, referring to the Southeast Asian economic bloc, which consists of 10 member states. Other late-stage investors, including private equity firms, are taking note and writing large checks in the region, he said.
“The next decade will be a very competitive decade for CEOs. You have to scale from 5 to 5,000 much faster to be more competitive (and for) more money, ”said Lauria.
SPACs are letterbox companies set up to raise money through an IPO with the sole purpose of merging with an existing private company or acquiring it and listing it on the stock exchange.
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The more established names in the region are preparing to be listed in public markets. Ride-hailing giant Grab announced in April that it would go public through a $ 39.6 billion SPAC merger, one of the largest blank check deals of all time. The newly merged Indonesian tech giant GoTo Group is also planning to go public soon.
Lauria told CNBC that a number of Golden Gate portfolio companies have been approached by SPACs and that many of them have stated that they are not ready to go public yet as there are advantages to being a private company.
“Many of our companies see (going public) as something that is a year, two or three years away. So you don’t automatically jump onto a SPAC, ”said Lauria. “When they’re ready to go public, be it a SPAC or a traditional IPO, they’ll make that call.”
Online classifieds company Carousell – one of Golden Gate’s portfolio names – is reportedly reviewing listing options on the SPAC route.
Golden Gate said in a report released Thursday that the number of IPOs in Southeast Asia will exceed 300 by 2030 as more local startups seek to list in domestic public markets. The venture firm expects an increase in medical technology startups as well as social commerce to dominate online transactions.
As the coronavirus pandemic pushed many physical business transactions online, Lauria pointed out that tech companies have seen strong growth in areas such as food delivery, telemedicine, e-commerce, and financial technology. This trend is expected to continue in the near future.
Around 400 million internet users live in Southeast Asia, 10% of whom went online for the first time in 2020. The internet economy in Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand – the region’s largest economies – is forecast to exceed $ 300 billion by 2025, according to a report last year.