The Abu Dhabi Securities Exchange (ADX) could see its first SPAC listing this year following the approval of a regulatory framework around blank cheque companies by the Securities and Commodities Authority.

SPACs, or Special Purpose Acquisition Companies, raise funds to acquire private companies with the purpose of taking them public by listing on stock markets rather than through traditional IPOs.

The SPAC regulatory framework was developed by ADX and Abu Dhabi’s Department of Economic Development (DED), along with the SCA. The move is in line with the emirate's strategy to develop its capital markets and bring in new investors.

The UAE SPAC regulations will require sponsors to raise a minimum of 100 million dirhams ($27 million) “in the 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 percent of proceeds are placed in a non-interest-bearing account, ADX said in a statement.

The regulation also makes provisions for sponsors outside of the UAE, giving them the ability to apply for approval to list their SPACs on the ADX.

(Reporting by Brinda Darasha; editing by Seban Scaria)

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