ADX submits SPAC framework proposal

The move, the Arabian Gulf’s first, would allow SPACs to publicly list while the framework would also open up sponsors outside of the UAE to apply for approval to list their SPACs on the local exchange



An investor looks up at electronic boards displaying stock information at the Abu Dhabi Securities Exchange. The ADX and DED, in conjunction with legal and investment specialists, have worked together to produce the proposed SPAC regulations, assessing the regulatory landscape and benchmarking US and international SPAC regulations. — File photo
An investor looks up at electronic boards displaying stock information at the Abu Dhabi Securities Exchange. The ADX and DED, in conjunction with legal and investment specialists, have worked together to produce the proposed SPAC regulations, assessing the regulatory landscape and benchmarking US and international SPAC regulations. — File photo
by

Muzaffar Rizvi

Published: Tue 9 Nov 2021, 6:58 PM

Abu Dhabi has proposed a regulatory framework to allow the listing of blank-cheque companies, potentially opening the door to a slew of Gulf-focused deals involving special-purpose acquisition companies (SPACs).

The move, the Arabian Gulf’s first, would allow SPACs to publicly list while the framework would also open up sponsors outside of the UAE to apply for approval to list their SPACs on the local exchange.

“The proposal led by the Abu Dhabi Securities Exchange (ADX) and the Department of Economic Development has been submitted to the Securities and Commodities Authority,” the ADX said in a statement on Tuesday.

The ADX and DED, in conjunction with legal and investment specialists, have 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 statement added.

New avenue of funding

Mohamed Ali Al Shorafa Al Hammadi, chairman of Abu Dhabi Department of Economic Development (DED), said the introduction of a SPAC regulatory framework will be an important step for Abu Dhabi, providing growing companies with yet another new avenue of funding.

“The Emirate has nurtured a pipeline of fast-growing regional companies by provid-ing robust regulations in a stable, low tax and fixed exchange rate environment. We will continue to support the economy of Abu Dhabi by promoting innovation and enhancing the business environment,” he said.

A new milestone

Sameh Al Qubaisi, executive director at Executive Affairs Office at Abu Dhabi DED, said the creation of a market for SPACs reflects the Emirate’s commitment to create a dynamic capital market environment, seamlessly connecting investors and issuers around the world in a stable, business friendly environment.

“This new milestone will support the Emirate’s efforts to accelerate economic diversification and enhance its financial services sector, attracting a wider range of professionals to live, work and invest in Abu Dhabi. Targeted companies in the UAE and beyond will also enjoy many advantages through a SPAC merger, from faster execu-tion and lower costs of marketing to upfront price discovery and access to the SPAC’s sponsors operational expertise,” he said.

ADX is ready

Saeed Hamad Al Dhaheri, Chief Executive Officer of Abu Dhabi Securities Exchange, said the introduction of SPAC regulations will further enhance our efforts to provide market participants with the widest range of investment vehicles and tools, including the recent introduction of a derivatives market platform.

Over the past several months, he said the exchange has undertaken rigorous SPAC simulations, operational readiness tests, and the preparation of educational material for sponsors and investors.

“ADX is now fully prepared to field inquiries from sponsors and investors ahead of the proposal’s expected approval. In the meantime, we will continue to encourage the listing pipeline on the exchange and roll out more innovative investment tools as part of our efforts to enhance liquidity,” he said.

The market capitalisation of the ADX recently exceeded Dh1.5 trillion, supported by a series of listings and increased international investment. 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.

Meanwhile, the benchmark Abu Dhabi General Index (ADI) increased by more than 61 per cent year-to-date making it one the best performing equity indexes in the world within the same period.

— muzaffarrizvi@khaleejtimes.com

How it works

A burgeoning dealmaking instrument, SPACs raise money to acquire a private firm with the purpose of taking it public, allowing the target to list more quickly on share markets than via traditional initial public offerings. Abu Dhabi-headquartered Anghami, the Middle East’s rival to Spotify, earlier this year announced it was merging with a SPAC, with a planned listing on the Nasdaq exchange, after achieving the valuation it was looking for. Abu Dhabi’s Brooge Petroleum and Gas Investment Co (BPGIC), which operates an oil storage and service business, also used the technique to list on the Nasdaq in 2019. — Reuters


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