Abu Dhabi SPACs

UAE’s SCA paves the way for GCC’s first SPAC listing

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The United Arab Emirates’ (UAE) Securities and Commodities Authority (SCA) has approved the Gulf region’s first regulatory framework for special purpose acquisition companies (SPACs), the Abu Dhabi Media Office said on Monday (Jan. 25).

The SPAC regulatory framework was developed by the Abu Dhabi Securities Exchange (ADX) and Abu Dhabi’s Department of Economic Development (DED), in conjunction with the SCA and legal and investment specialists. Benchmarked and assessed against best-in-class US and international SPAC regulations, the robust framework will provide international investors with access to unique growth opportunities. The regulation also makes provisions for sponsors outside of the UAE, giving them the opportunity to apply for approval to list their SPACs on the ADX.

Created with attractive incentives and an innovative share structure, the UAE SPAC regulations provide sponsors with a seamless and efficient process to take companies public. Sponsors will be required to raise a minimum of AED 100 million in the Initial Public Offering (IPO) and units sold will comprise warrants that give investors and sponsors the right to convert them into shares. To protect investors, once the IPO is complete a SPAC must ensure that 90% of proceeds are placed in a non-interest-bearing account, ADX said.

The framework’s approval comes as SPACs have shed popularity in the United States after an initial boom but are taking off in Asia. Last month, U.S. regulators said they were considering toughening rules around how underwriters, boards of directors and sponsors of SPAC structure fees, issue projections and disclose conflicts.

Still 2021 was a record-breaking year as 604 SPACs raised $144 billion in the U.S., according to Renaissance Capital.

Many companies backed by Middle East investors are listing on world stock exchanges through blank-cheque companies.

Abu Dhabi-headquartered Anghami, a Spotify rival in the Middle East, became the first Arab technology company to list on Nasdaq in New York in early March last year, through an SPAC deal.

Special purpose acquisition companies (SPAC), or blank-cheque companies, are shell companies that raise money in an initial public offering (IPO) and put it in a trust for the purpose of merging with a private company and taking it public.

The Gulf Cooperation Council (GCC) is a political and economic union of Arab states bordering the Gulf. It was established in 1981 and its 6 members are the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain.