SPACs & the Red Sycamore Position

There is a lot of talk about Special Purpose Acquisition Companies (SPAC).  A SPAC is a company with no commercial operations, a vehicle formed specifically to raise capital through an initial public offering (IPO), for the purpose of acquiring an existing company.  They are known as blank check companies, although I quite dislike this characterisation.  SPACs have been around for decades, but they have become more popular in recent years due to high-profile deals in the US. 

SPACs are formed by initial investors, called sponsors, with expertise in a particular industry, business sector or region.  The intention is to use the SPAC as a vehicle to pursuing deals in that area.  SPAC founders generally have acquisition targets in mind, but this is never disclosed to prevent another entity from buying up equity in the target to raise to price, and to avoid the need for extensive disclosures during the IPO process.  This is why they are called “blank check companies”, since IPO investors have no idea what company they ultimately will be investing in.  SPACs appoint underwriters and court institutional investors before offering shares to the public.  The investors in SPACs can range from major private equity funds to retail investors. 

At the time of their IPOs, SPACs have no existing business operations.  As such, the money SPACs raise in an IPO are placed in an interest-bearing trust account.  These funds cannot be disbursed except to complete an acquisition or to return the money to investors, in the event the SPAC is liquidated.  SPACs have two years to complete an acquisition or they must return their funds to investors.  In some cases, some of the interest earned from the trust can be used as the SPAC’s working capital.  After an acquisition, a SPAC is usually listed on one of the major stock exchanges. 

Being acquired by a SPAC is an attractive option for owners of a smaller company, or for a company seeking a quick listing to raise further funds in the market.  Selling to a SPAC adds up to 20% to the sale price compared to a typical private equity deal.  A SPAC acquisition is a short cut to IPO for companies that do not have the three year track record.  SPACs often have experienced partners, with access to further funding, who can navigate the IPO process. 

SPACs have experienced a resurgence in popularity in recent years, attracting major underwriters such as Goldman Sachs, Credit Suisse, and others.  Retired and semi-retired executives helm them looking for a relatively quick payday from a short project.  Which brings us to the Singapore Exchange (SGX).  SGX has observed, with interest, the popularity of SPACs listings in other markets.  This has sparked renewed interest for SPACs to be introduced to the Singapore capital market.  SGX suffers from a chronically under-developed secondary market, and SPACs could help that as well.  Accordingly, SGX launched a public consultation exercise, which was open until the 28^th April 2021, to assess the appetite for SPACs and consider allowing them to list.  Depending on the feedback from the consultation, SGX are aiming to introduce a framework by mid-2021. 

This is a welcome development.  We need to develop more Asian-based SPACs to add depth to the market and spur the secondary market.  SPACs would also help the market move into a new direction.  Currently, the SGX is dominated by banks and real estate.  We lack technology, pharmaceutical and other stocks, which is a strategic concern if we want to reposition the economy for a post-climate change environment.  Aside from raising the capital help in the market, it would also encourage some variety in future listings. 

Another possible advantage for SPACs would be to increase investor choice.  It is as a result of the variety of growth industries that SPACs tend to focus on. When they list, investors are afforded an opportunity to be exposed to these high-growth companies early.  Otherwise, they would be priced out of the IPO, and would have to pick them up at higher prices in the secondary market, which is a deterrent.  Singapore retail investors are not particularly sophisticated.  They tend to be conservative, and move in a herd mentality.  They are coddled, and lack discernment.  They have substantial disposable income.  This would be an educational opportunity for them. 

Currently, in the consultation paper, SGX has proposed that Singapore SPACs have a minimum market capitalisation of S$300 million, aligned with mainboard rules, with a timeframe of three years to de-SPAC.  This ensures that SPACs formed have the financial muscle to actually engage in a buyout of a target business.  The larger sum also ensures that any SPAC formed has experienced sponsors and management, with access to further resources, and have a track record.  This is to protect retail investors.  They propose that a minimum 90% of IPO proceeds to be placed in escrow pending acquisition of a target.  This ensures that funds are not squandered in management remuneration.  The three year time-frame limits to adverse effect on opportunity cost should the SPAC disband. 

To further protect independent and retail shareholders from adverse sponsors and management interests, and ensure that they are all aligned, SGX has proposed that sponsors and management, as well as their associates, are restricted from voting on business combinations.  This means business combination transactions are completed on terms which are not prejudicial to the interests of the SPAC and independent shareholders.  Approval of the business combination must be obtained from the SPAC’s independent directors and independent shareholders. 

Independent shareholders who vote against the business combination may choose to redeem their ordinary shares for a pro rata amount of cash held in escrow.  SGX also proposed imposing a moratorium on shareholding interests of key parties at specified junctures, and subject founding shareholders and management team to a minimum equity participation.  This will be determined based on the market capitalisation size of the SPAC at IPO. 

To safeguard against dilution risks, SGX proposed limiting capital redemption rights at de-SPAC to independent shareholders who vote against the business combination.  The redeemed shares are to be cancelled, and accompanying warrants are to be nullified and void.  This restriction may mitigate concerns on high redemption rates at the vote for the business combination.  This is because due to additional funding requirements to complete the business combination, it would cause further dilution to remaining shareholders.  To further mitigate dilution risks arising after the business combination, SGX proposed for any warrants to be linked to underlying ordinary shares so that they are nullified when a share is redeemed. 

The biggest hurdle for any SPAC in Singapore is the proposal that upon successful completion of business combinations, SGX proposed resulting issuers meet some existing listing requirements, such as requiring “prospectus-level disclosures” on the target businesses, and shareholders’ circulars containing information such as the financial position and company management to be submitted to SGX for review.  Resulting issuers that do not meet listing requirements under mainboard rules will be delisted.  This requires further though on the disclosure of target business.  This would put a timeline pressure on SPAC management to complete the deal quickly. 

All that aside, however, with strong demand in the region, and clamour for Asian-sponsored SPACs that have listed in other exchanges, the prospects of having SPACs in Singapore are very positive, and it is likely that we will see them here.  Singapore is well placed to become an Asian hub for SPACs, complementary to the recent introduction of VCCs, and proliferation of SFOs.  The environment is ripe for a new asset class. 

Some would claim that the declining IPOs of SPACs, particularly in the United States, point to a conclusion that Asian markets missed out, but we must also consider that in the fort quarter of 2021, amidst a pandemic, SPACs have already raised more than US$100 billion globally.  The vast majority of listings are on American exchanges.  SPACs are here to stay, but there will be a period of consolidation, and a tightening of regulations in Asia, where authorities are more risk-averse, and for good reason. 

There is an element of bandwagonism in the US, and SPACs differ in quality, and size.  It would makes sense to learn from the American experience, and only take the best.  This is the purpose of that SGX public consultation.  Whilst it can be argued that this conservative approach to SPACs will severely impact the number of deals, it raises the quality of SPACs on offer, and the viability of remaining deals.  American regulators have already indicated that they are clamping down on some aspects of SPACs, including the dilution risks of untethered warrants. 

Major banks have issued reports estimating that SPACS have around US$129 billion of capital requiring deployment in the next few years.  That alone is expected to create as much as US$900 billion in enterprise value via mergers and acquisitions over the next 24 months, assuming they work.  In the meantime, there is a lot of capital locked up in lower yield asset classes which could be better deployed elsewhere.  There is a danger of a bubble there, if the quality of the deals is not as expected. 

As much as we want Singapore to be a SPAC hub in Asia, we must also be wary of having too much capital locked up due to unreasonably optimistic assumptions, only to de-SPAC.  If these companies do not meet listing requirements, that backdoor route to listing is closed, and value creation is loss.  We cannot afford to absorb that amount of opportunity cost. 

There is increasing concern among regulators and investors about the rosy projections some emerging technology companies have made ahead of their SPAC mergers with SPACs.  Most of them are in the electric vehicle space.  As it is, Nikola Corporation, which has not produced a single viable battery or vehicle, is still valued at US$5 billion.  Faraday Future, a seven-year-old electric vehicle (EV) start-up, has yet to sell a single car or even develop a viable battery.  It is still projecting more than 266,000 vehicles in sales and US$21.4 billion in revenue by 2025, according to its investor presentation.  The company, founded by failed Chinese tycoon Jia Yue Ting, agreed to go public via a SPAC in January 2021. 

Considering these concerns, although we have fielded enquiries directly, or through our partner entities, we are not ready to take the first SPAC deal that falls on the table.  The numbers have to be right, and we must still maintain control of the company’s direction.  We have an EV that is ready for production.  We have a battery that is proven to be superior to any in the market.  What we want is market dominance, not a quick IPO.  A SPAC is worth considering, but only on our terms.

Quora Answer: Can Funds be Withdrawn from an Irrevocable Trust?

The following is my answer to a Quora question: “Can funds be withdrawn from an irrevocable trust?” 

An irrevocable trust is set up as a distinct legal entity from the settlor of the trust.  It is a type of trust where the terms of the trust document cannot be modified, be amended, or be terminated, without the permission of the beneficiaries.  Since the settlor effectively transferred all ownership of assets into the trust, he legally removed all rights of ownership to the assets, and to the trust. 

That being said, there are provisions within the trust document which can be added upon setting up the trust which allow a settlor to take control of some assets.  It cannot be done directly, since that would render the irrevocability of the trust null and void.  It can be arranged through a process of decanting, where there is provisions within the trust which allow specific assets or asset classes to be moved to a newer trust, one where the settlor is a trustee.  It could also allow for the trust to be folded into another trust.  All of this is ostensibly for the purpose of more effectively managing the assets in a trust.  Provisions could also be added to change the domicile of the trust across borders, if that is more advantageous. 

Another way of ensuring some control is to make a company one of the beneficiaries, or the only beneficiary, and have a beneficial relationship with that company.  This would involve arranging to be a trustee, or to have control of a trustee, and then being a controlling party in the beneficiary. 

Irrevocable trusts are “irrevocable” in the sense that assets vested in the trust have their ownership “irrevocably” transferred to the trust.  This “irrevocability” is a façade which can be arranged.  There are always ways around legalities.

Quora Answer: How Often Should I Review My Insurance Policy?

The following is my answer to a Quora question: “How often should I review my insurance policy?” 

At the very least, you should have your policy portfolio reviewed once a year.  This typically includes a financial health review, your coverage, and a consideration of developments in the next few months that would affect your coverage. 

However, a review would be necessary before these annual reviews if there have been significant events which would affect your coverage.  An example of such events would be the change of marital status, an addition to the family, change of occupation type, and major claims or death in the immediate family.  In effect, any event which affects the amount and availability of coverage to a significant degree would require a review.

Project Evaluation (EMinent Communicators TMC, 11th February 2020)

The following is my project evaluation on the 11^th February 2020, at EMinent Communicators Toastmasters Clubs.

Project Evaluation (AIA TMC & Tampines Changkat, 19th December 2019)

The following is my project evaluation on the 19^th December 2019, at AIA Toastmasters Clubs’ joint meeting with Tampines Changkat Toastmasters.

The Battery Industry in 2026: Where the Money, the Chemistry, & the Carbon Accounting Sit

The electric vehicle battery market is not a single market.  It is four or five overlapping markets, moving at different speeds, and any commentary that treats batteries as one undifferentiated blob is not analysis.  It is marketing copy wearing a lab coat.

The Market, Sized Honestly

Global EV sales are expected to top 20 million units in 2025, roughly triple 2021 levels.  Battery demand is forecast to grow at a compound annual rate of 17.5% through 2035, with the market index rising from 100 in 2025 to 485 by 2035.  Passenger vehicles account for approximately 65% of total battery volume in 2026, though that share gradually declines to 55% by 2035 as commercial fleet electrification accelerates.  Cost has fallen from over US$1,100 per kilowatt-hour in 2010 to roughly US$130 per kilowatt-hour in 2024, with the industry targeting US$80 per kilowatt-hour by 2030, the point at which total cost of ownership reaches parity with internal combustion vehicles across most vehicle segments.

The Chemistry Breakdown: Where the Real Competitive War is Fought

Lithium Iron Phosphate, LFP, continues gaining share and is projected to reach 50% of passenger EV battery volume by 2030, favoured for cost, safety, and cycle life.  Nickel-rich NMC chemistries retain dominance in premium and long-range vehicles, forecast to hold roughly 46% share in both the European Union and North America through 2030.  The industry is simultaneously pushing toward ultra-high-nickel variants, above 90% nickel content, to lift energy density further while reducing cobalt dependency.

Silicon anode technology is where the genuine engineering gains are happening.  High silicon content anodes can deliver more than 350 Wh/kg, rising to 500 Wh/kg with prelithiation, translating directly into extended vehicle range.  Solid-state batteries remain the industry’s most hyped and least delivered promise.  The global solid-state battery market is projected to grow from roughly US$372 million in 2026 to somewhere between US$2.2 billion and US$3.6 billion by the early 2030s, an eye-catching compound growth rate on a genuinely tiny base.  Toyota Motor Corporation has targeted mass production around 2030, and China’s FAW Group deployed its first semi-solid-state EV battery in February 2026, delivering over 500 Wh/kg at the cell level with a claimed range exceeding 1,000 kilometres.  Impressive on a specification sheet.  Still under 5% of total battery volume through 2035, according to sector forecasts, because manufacturing complexity and cost have not caught up with the marketing department’s enthusiasm.

Sodium-ion batteries were meant to be in mass EV production by 2026.  That timeline has cooled considerably as LFP prices kept falling, and sodium-ion now has to match LFP on cost, performance, and durability simultaneously, a considerably harder target than beating a chemistry that was still expensive when the sodium-ion roadmaps were drawn up.

Where the Industry’s Credibility Problem Sits

Every battery technology claiming a breakthrough energy density, an imminent production date, or a proprietary chemistry that eliminates a critical mineral deserves the same question applied to it: where is the third-party verification, and where is the patent actually registered, checkable, and enforceable?  The sector is littered with companies that have announced production timelines, made energy density claims, and asserted patent ownership that collapsed under basic scrutiny.  A specification sheet is not evidence.  A registered, searchable patent number is evidence.  Anyone evaluating a battery technology claim in 2026 should demand the latter and treat the former as marketing until proven otherwise. 

The EU Battery Regulation, 2023/1542, has turned carbon accounting from a sustainability nicety into a binding market access requirement.  Carbon footprint declarations became mandatory for EV batteries from 18^th February 2025, and expanded to rechargeable industrial batteries above 2 kWh from 18 February 2026.  From 18^th February 2027, that declaration must be accessible through a QR-linked Digital Battery Passport, tracking material composition, carbon footprint, recycled content, and performance data across the battery’s operational life.  Crucially, the declaration applies per manufacturing plant, not per company, and requires third-party verification by a notified body.  Self-declared carbon figures, the report from PSQR notes explicitly, will not survive a 2026 audit cycle.

This changes the financing conversation entirely.  A gigafactory that cannot produce a verified, plant-specific carbon footprint declaration will not access the EU market, full stop, regardless of how compelling its energy density claims are.  That single fact is reshaping where capital flows within the sector.  Financing structured around compliance-grade carbon accounting, rather than voluntary offsets purchased for a sustainability report nobody audits, is becoming the only financing that survives contact with the regulation.  Manufacturers positioning themselves for verified, low-carbon production, with traceable cobalt, lithium, nickel, and natural graphite supply chains, are the ones building a genuine moat.  Manufacturers hoping a voluntary carbon credit purchase will paper over an unverifiable supply chain are building a business that stops at the EU’s border on 18^th February 2027.

The Underlying Trend

The battery market is consolidating around verified performance and verified carbon data simultaneously.  Chemistry innovation without registered patents is marketing.  Carbon claims without third-party verification are liabilities waiting for an audit.  The capital that wins this decade is the capital that priced both of those facts in before the regulation forced everyone else to.

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Terence Nunis | Executive Chairman, Equinox Zenith & Red Sycamore | Author, The 1% Playbook: The Billionaire Cheat Code

Streamlined EV Production

One of the ways we reduce the production and maintenance cost of our electric vehicles is by reducing the number of parts.  It took a talented team many years to successfully reduce the number of parts, and streamline the production process.