Dubai: The SPAC (special purpose acquisition company) movement could soon be a reality in the UAE.
The Abu Dhabi Securities Exchange (ADX) and Abu Dhabi’s Department of Economic Development (DED) have submitted a proposal to the regulator - Securities and Commodities Authority (SCA) - for the introduction of an SPAC framework, which would be the first such in the Gulf.
With stock market activity in Abu Dhabi heading for new peaks, SPAC would allow a new way for local businesses to list. The market capit of ADX recently exceeded Dh1.5 trillion, brought about by a series of IPO listings and increased international investments. At the end of the first 10 months of the year, the value of shares traded on the exchange reached Dh284 billion, while the foreign net investment reached Dh6.1 billion (The benchmark Abu Dhabi General Index (ADI) was higher by more than 61 per cent year-to-date, making it one the best performing equity indexes in the world within the same period.)
The proposed framework will facilitate initial public offerings of SPACs, providing investors worldwide with access to growth opportunities. SPACs have swept through the US markets, where some prominent startups and digital entities have gone in for mergers with the acquiring company for a listing on Nasdaq. This eschews the traditional IPO way.
The ADX and DED, in conjunction with legal and investment specialists, worked together to produce the proposed SPAC regulations, assessing the regulatory landscape and benchmarking US and international SPAC regulations.
Following its review by the SCA, the SPAC proposal will require formal regulatory approval.
“The DED’s participation in the creation of the SPAC regulation reflects our commitment to supporting the growth of Abu Dhabi’s economy and making the emirate an attractive destination for international capital,” said Mohamed Ali Al Shorafa Al Hammadi, Chairman of Abu Dhabi Department of Economic Development.
“The emirate has nurtured a pipeline of fast-growing regional companies by providing robust regulations in a stable, low tax and fixed exchange rate environment.”
Targeted companies in the UAE and beyond will also enjoy many advantages through a SPAC merger, from faster execution and lower costs of marketing to upfront price discovery and access to the SPAC’s sponsors operational expertise