Dubai: A SPAC deal has just been signed off in Abu Dhabi, which will see United Printing & Publishing listing on the ADX and in turn becoming what would be the Gulf’s 'first successful SPAC merger process’.
SPAC – or Special Purpose Acquisition Company – deals come into play to allow the entities involved to go in for a stock market listing but without having to go through the IPO process.
In this case, the ADC Acquisition Corporation (ADC) entered an agreement with ADQ Developmental Holding for a business combination with United Printing & Publishing Sole Proprietorship llc.
To effect the deal, ADQ will be issued with 62.3 million new Class A shares in ADC at Dh10 a share, which implies an equity value of Dh623 million for UPP. After the merger, ADQ will remain the single largest shareholder in the combined company.
Parallel to the SPAC, ADC will go for a PIPE (private investment in public equity) fundraising of up to Dh734 million to 'pursue organic and inorganic growth avenues' for UPP. ADC will issue up to 73.4 million Class A shares at Dh10 for the PIPE fundraising.
Abu Dhabi gets in early with SPAC rules
SPAC deals had been trending in the US through 2020-21, and was seen as an effective alternative for companies to list and raise funds while eschewing the traditional going public ways. In the Gulf, Abu Dhabi had been one of the first jurisdictions to bring in regulations that would see SPACs being formed. And in effect, opening up another avenue for businesses to seek a capital market presence.
On completion of the transaction, UPP will see Dh1.1 billion of proceeds from the SPAC and PIPE (private investment in public equity) fundraising. The company will thus have 'sufficient capital to pursue organic and inorganic growth opportunities'.
"These will help accelerate UPP’s growth trajectory in its business segments and can capture market share by leveraging its brand, customer base, and the strength of its ecosystem," said a statement issued by ADC.
“As the region’s first SPAC merger process, this transaction marks a notable achievement for ADC and reaffirms ADX as the region's most dynamic financial market," said Seif Fikry, CEO, ADC. "We are confident that UPP represents an attractive platform, with strong and stable revenue, through its long-term contracts and relationships with anchor customers, such as UAE government entities.
UPP’s high revenue visibility provides a robust foundation for future growth, which can be accelerated with funds which will be raised from the PIPE.
There have been other SPACs featuring UAE companies, notably that of Anghami, the Arabic music streaming platform and which went on to list on Nasdaq. The ride hailing platform for mass transportation Swvl was another.