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Tuesday, 18 January 2022

Egypt’s first-ever SPAC to list on EGX by next month -Omran

Make way for our first SPAC: Egypt’s first blank-check company will be established within the next month, Financial Regulatory Authority (FRA) chief Mohamed Omran told Bloomberg Asharq yesterday. “At the end of this month or early next month, we will have the first blank check company,” he said. The SPAC would be the first to list on the EGX and would have initial capital — pre fundraising — of EGP 10 mn, which is the minimum requirement set by the FRA.

Who’s involved: A consortium of Egyptian and international companies is planning to file for a license from the FRA to establish a SPAC, Zulficar & Partners founding partner Anwar Zeidan told Enterprise, without disclosing the names of the companies. After receiving FRA approval, the group will reveal more details on its plans, including the amount of capital it’s looking to raise.

What’s next: Once the consortium has obtained a venture capital license, a board of directors will be appointed, with a chairman who complies with the FRA’s regulations and guidelines for private equity firms. The blank-check firm would then be publicly listed on the EGX and have one month in which to raise capital from investors via a share sale. The funds raised would be placed in an interest-bearing bank account for a maximum of two years while it looks for a company to acquire or merge with —but you can probably expect that they’ll have a target in mind pre-listing. The SPAC must have at least EGP 100 mn in capital to complete an acquisition or merger and at least 80% of the SPAC’s capital must be used to acquire a target company.

Background: The FRA issued late last year the rules and regulations for establishing local blank-check firms, after the regulator greenlit EGX boss Mohamed Farid’s proposal to allow SPACs in Egypt. The proposal was partly driven by an increased interest in SPACs in the MENA region, following Swvl’s move to merge with blank-check firm US Queen’s Gambit Growth Capital and list on the Nasdaq, as well as Anghami’s plans to follow suit.

What about Swvl and Anghami? Queen’s Gambit is looking to close with Swvl this month, the domestic press quoted Swvl CEO Mostafa Kandil as saying last month. The company updated its SEC filing in late December. Anghami is looking to close by 11 February. You can check out its latest investor presentation here.

What’s a SPAC again? A special purpose acquisition company is a type of shell company used by investors to acquire firms. SPACs raise money from the public in an IPO and then use the proceeds to merge with or acquire an appropriate company. Check out our handy explainer for more on how SPACs work.

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