The door is being opened for SPACs in Dubai, but not without strict rules. Last week, the Dubai Financial Services Authority (Dubai’s version of the SEC) issued its guidelines for the listing of special purpose acquisition companies with the hopes of mitigating some of the common risks associated with the investment vehicles.
The stipulations? According to a statement by the DFSA, SPACs will be required to “ring-fence” or separate. SPACs will also be required to appoint a sponsor company to oversee the listing and acquisition of a target company. These independent third parties will also be responsible for protecting the money raised from investors as well as providing an extra layer of general scrutiny.
Why it matters
MENA investors are eager to gain access to SPACs in their home markets. However, the DFSA isn't opening the floodgates just yet. In addition to the broad guidelines mentioned, each SPAC will be “considered on a case-by-case basis” and individual guidelines may vary based on the nature and complexity of proposals.