The Clap
The EGX submitted proposed amendments to listing rules on the EGX to the FRA.
The Deets
Under the amendments, companies could list by being acquired by or merging with another company. AKA: a SPAC (Special Purpose Acquisition Company) deal.
A refresher on SPACs🧊
SPACs are entities with no commercial operations that raise funds through an IPO, with the hopes of one day acquiring a company with actual operations and taking it public.
SPACs have been increasing in popularity in recent years in western markets, & it’s safe to say that it’s divided many opinions.
Who is affected🤷
The amendments would also facilitate the listing of the SPAC companies themselves.
Once listed on the EGX, SPACs have up to two years to acquire a company. Until then, their raised funds must be tied up in fixed-income investments.
In the case that a SPAC fails to acquire a company within two years after listing, the SPAC is liquidated, delisted, & all funds raised as well as their returns are returned to investors.
Why is this important🤔
If approved by the FRA, the amendments could unlock new horizons for startups with high growth prospects through expanding into capital markets.
This would increase the scope of their business, increase EGX’s market cap, & boost Egypt’s economic growth. The listing of promising startups on the EGX would also attract foreign investors.
