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Monday, 24 January 2022

Dsquares is jumping on the SPAC train

EDITOR’S NOTE- Dsquares founder Marwan Kenawy has denied Al Shorouk’s reporting on this story since it was published, as we noted in a follow-up story.

Dsquares is jumping on the SPAC train: Loyalty services provider Dsquares is looking to establish a special-purpose acquisition vehicle (SPAC) and is currently working on fulfilling the Financial Regulatory Authority’s (FRA) requirements for the listing of SPACs on the EGX, Al Shorouk reports, citing unnamed sources.

The target: Dsquares would look for its blank-check firm to merge with another company operating in customer offers and discounts, Al Shorouk reported the sources as saying, without providing any further details.

The company hasn’t decided on the form its offering will take, and is currently mulling whether it will be a public subscription or private offering, Al Shorkouk claims.

About Dsquares: The Cairo-based startup provides end-to-end loyalty, rewards and concierge services. Investors include Lorax Capital Partners, our friends at Algebra Ventures, the European Bank for Reconstruction and Development, the International Finance Corporation, Cisco, and the Egyptian-American Enterprise Fund.

Next steps: Investors that want to set up a SPAC first need to obtain a venture capital license. A board of directors is appointed next, 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 into an interest-bearing bank account for a maximum of two years while it looks for a company to acquire or merge with.

We’re expecting our first SPAC to be established soon: “At the end of this month or early next month, we will have the first blank check company,” FRA chief Mohamed Omran 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. 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.

Is this the start of a SPAC rush in Egypt? The FRA late last year issued 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 hit the Nasdaq after a merger with Vistas Media Acquisition Company.

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