Abu Dhabi has given its approval for a regulatory framework to handle SPAC listings. Image Credit: Gulf News Archive

Dubai: The Abu Dhabi Securities Exchange will have its first SPAC listing later in the year. SPACS – or Special Purpose Acquisition Company – has emerged as one of the hottest trends in companies seeking public funds via stock market listings - but not as an IPO.

Abu Dhabi has become the first financial market in the Gulf to come up with a regulatory framework exclusively to oversee listings by SPAC. The framework was developed by ADX and Abu Dhabi’s Department of Economic Development (DED) in conjunction with SCA (Securities and Commodities Authority) as well as legal and investment specialists. It has been benchmarked - and assessed - against US and international SPAC regulations.

The platform will “provide international investors with access to unique growth opportunities”. There are provisions for SPAC sponsors from outside of the UAE, giving them the ability to apply for approval to list their SPACs on ADX. (As a case in point, the Arabic music streaming service Anghami will soon list on Nasdaq in New York after being acquired by a SPAC. It is the first tech company from the region to list on Nasdaq.)

  1. The UAE SPAC regulations provide sponsors of a future listing with a "seamless and efficient process" to take companies public.
  2. Sponsors will be required to raise a minimum of Dh100 million in the Initial Public Offering (IPO) and units sold will comprise warrants that give investors and sponsors the right to convert into shares.
  3. To protect investors, once the IPO is complete a SPAC must ensure that 90% of proceeds are placed in a non-interest-bearing account.

SPACs-led diversity

“SPACs provide investors seeking to diversify their portfolios with growth opportunities that are protected by some of the world’s strongest regulations,” said Hisham Khalid Tawfiq Abdulkhaliq Malak, Chairman of ADX. “We are committed to rolling out the SPAC framework in a timely manner and preparing the exchange to be operationally ready to support sponsors with listings, marketing, and communication advice.

“The introduction of SPAC regulations complements our efforts to execute our ‘ADX One’ strategy by bringing the most sought out products and services to investors, including covered short selling, securities lending and borrowing, market making and ETFs (Exchange Traded Funds).”