Markets

Saudi Arabia to introduce SPAC listings

March 17, 2023

Ades Holding is expected to raise about $1.22bn from selling more than 338.72 million existing and new shares — Avalon Pharma's IPO subscription period will last three days, starting January 30 and ending February 1

Saudi Arabia plans to allow special-purpose acquisition companies, also known as SPACs, to list on the kingdom’s bourse, a top official told a conference this week.

These entities raise money through an initial public offering (IPO) and then use the proceeds to acquire other companies.

SPACs were seen as a simpler, quicker and more effective way for businesses to go public.

Yazeed Saleh Aldemaigi, deputy of strategy and international affairs at Saudi’s Capital Market Authority, said the regulator would allow SPACs so that companies can “reach the market easier”, Bloomberg reported.

SPACs had proved hugely popular, especially to acquire ascendant tech companies, but disappointing returns and rising interest rates have dulled their lustre for investors.

In the US, SPACs’ acquisitions totalled $59.9 billion in 2022, down from $368 billion a year earlier, according to law firm White & Case, while the number of deals fell by nearly half over the same period.

Last year Abu Dhabi Securities Exchange (ADX) became the first Gulf bourse to introduce rules permitting the listing of SPACs.

ADQ, an Abu Dhabi government-owned holding company, and Chimera Investments, also based in the emirate, launched the UAE’s first SPAC in April 2022.

ADC Acquisition Corp raised AED 367 million ($99.93 million) in an initial public offering, listing on Abu Dhabi’s bourse last May. Its shares ended Thursday at AED 10.82, up about 8 percent on its IPO price. It has yet to make any acquisitions.

In July 2021 Swvl, which began in Egypt as a bus ride-hailing app, went public via a SPAC that valued the company at $1.5 billion.

The Dubai-based firm’s shares, listed on the Nasdaq, are down 99.5 percent, giving it a market capitalisation of $7.8 million.