On Friday, Malacca Straits Acquisition Company Limited (MLACU) made their debut by filing a $125 million IPO. They will be focused on the Southeast Asian middle-market with intended targets in the media, food processing, renewable energy and healthcare industries, with an emphasis on business conglomerates. Total enterprise value of the target will ideally be between $300 to $500 million. Malacca Straits Management Company Limited, the sponsor, is a British Virgin Islands company controlled by MLACU management.
The ASEAN market, made up of Brunei Darussalam, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam, is predicted to become the fourth-largest economy in the world by 2030 after the United States, China and the European Union. From 2010-2018, this market experienced an economic growth rate of 5.4%, much higher than the US or EU market. Management believes that substantial value can be unlocked by continuing the de-conglomeration phase ASEAN is experiencing. A high number of family owned business groups are transitioning to the next generation of managers, who are hungry for modern portfolio management and capital allocation expertise. This should translate to sellers being more receptive to MLACU’s offers.
This executive team brings deep banking, private equity, hedge fund, and corporate experience, led by Kenneth Ng as Chief Executive Officer, and Stanley Wang, as Chief Financial Officer. Mr. Ng is the founder and managing partner of Ark Pacific Capital, focused on private equity, real estate, and special situations investment throughout Asia. He has been the Executive Director of Sprint Power Technologies Limited, a consulting firm with a focus on low-carbon automotive technology. Before that, Mr. Ng was Executive Director and founding team member of Elliott Advisors (HK) Limited, the Asian arm of Elliott Advisors. He also had stints at UBS, TPG Capital Asia, and Merrill Lynch & Co.
Stanley Wang, Malacca Strait’s Chief Investment Officer, brings investment, conglomerate, and banking experience to the table. He has been the founder and managing director of K2 Venture Capital Company Limited, a VC fund focused in fintech and artificial intelligence opportunities in Southeast Asia. His conglomerate experience ranges from managing director at Emerging Asia Capital Partners, to senior financial advisor to Ital-Thai Development PCL, a civil infrastructure and construction group. Prior to this, Mr. Wang was a banker at Goldman Sachs and Morgan Stanley.
For an Asia focused SPAC, this offering is larger with more target-friendly terms compared to other recent offerings. While this is a departure from prior terms, it makes sense given the strength of the management team and the red-hot SPAC market as a whole. Malacca Straits’ offering is a $125 million, 1/2 warrant, 18 month life SPAC, and $10.00 per unit in trust. This is very different compared to recent Asia-focused filings like Brilliant Acquisition Corp (BRILU) and Greencity Acquisition Corp (GRCYU). Brilliant and Greencity were both $40 million, 12 month life SPACs, with 1 full warrant and a 1/10 right included for Brilliant.
The Straits of Malacca is a 550 mile stretch of water between the Malay Peninsula and the Indonesian island of Sumatra. It is also one of the most important shipping lanes in the world. This team wants to be at the center of ASEAN commerce, and the SPAC terms are priced as if they already are. With the strength of management’s background, they very well could be. Look for Malacca Straits to price the end of July.
Summary of the terms below: