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Thndr Claps » EGY Claps » FRA 🏢 » Want to Set Up a SPAC? Here’s What You Need to Know👇

Want to Set Up a SPAC? Here’s What You Need to Know👇

by Shams Abbas
November 22, 2021

The FRA issued the rules and regulations for investors looking to establish local special purpose acquisition companies (SPAC). For a refresher on SPACs click here.

Steps to setting up your first SPAC🤩 Your soon-to-be SPAC must first start out as a licensed Venture Capital firm, with a minimum issued capital of EGP 10 million. 

Where do I get EGP 10 million?🙃 Investors. In the case of SPACs, they’re called sponsors. Once the minimum capital requirement is met, the SPAC is eligible to list on the EGX & raise even more capital. SPACs need a minimum capital of EGP 100 million to complete an acquisition. 

What are Sponsors?🤔 Sponsors are the initial investors who together establish the SPAC, & usually have prior experience in the activities of the target company. 

What’s a Target Company?🤷‍♀️ That’s the company the SPAC is eyeing to acquire. 
However, SPACs have up to two years after they’ve gone public to acquire or merge with a target company. If the SPAC fails to do so, all raised funds are taken out of the trust account & back to investors. 

What’s a Trust Account?🧐 The SPAC’s raised funds must be deposited into a trust account, where they are invested in risk-free instruments until an acquisition takes place.

SPACs will not be required to report financial statements until they’ve acquired a company, which makes sense considering their sole purpose is to acquire a company. 

You’re all set!⭐

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