UAE regulator approves Gulf's first SPAC framework

Credit: REUTERS/Stringer .

DUBAI, Jan 24 (Reuters) - The United Arab Emirates' Securities and Commodities Authority (SCA) has approved a regulatory framework for special purpose acquisition companies (SPACs), the first in the Gulf, the Abu Dhabi Media Office said on Monday.

The regulation also allows sponsors abroad to apply for approval to list their SPACs on the Abu Dhabi Securities Exchange (ADX), the office said.

ADX in a separate statement said the move would pave the way for its first SPAC listing this year.

A dealmaking instrument that is taking off in Asia though it has shed popularity in the United States after an initial boom, 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.

The framework's approval comes amid a simmering economic rivalry between Abu Dhabi and Saudi Arabia. Dubai, the UAE's tourism and commerce hub, is racing to resuscitate its stock exchange, as bigger bourses like ADX and Riyadh's Tadawul attract larger listings and strong liquidity.

"Benchmarked and assessed against best-in-class U.S. and international SPAC regulations, the robust framework will provide international investors with access to unique growth opportunities," ADX said. The exchange said the framework was developed by ADX and Abu Dhabi's Department of Economic Development, as well as SCA and "investment specialists".

"Sponsors will be required to raise a minimum of AED 100 million ($27 million) in the Initial Public Offering (IPO) and units sold will comprise warrants that give investors and sponsors the right to convert them into shares," the exchange said. SPACs must place 90% of IPO proceeds in an account bearing no interest, it said.

Shareholders in Nasdaq-listed SPAC Vistas Media Acquisition Company Inc VMAC.O last week approved a merger with Abu Dhabi-headquartered Anghami, a Spotify rival in the Middle East. Anghami last year said the SPAC merger would make it the first tech company from the region to list on Nasdaq.

The merger will complete after closing conditions are met, after which the combined entity's common stock will begin trading under the ticker ANGH.

($1 = 3.6726 UAE dirham)

(Reporting by Yousef Saba; Editing by Kenneth Maxwell)

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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