SPAC framework boosts Nomu appeal, diversifies investment products

Logo of Capital Market Authority (CMA)

The Capital Market Authority’s (CMA) approval of a new framework for Special Purpose Acquisition Companies (SPACs) on Nomu-Parallel Market marks a qualitative step to diversify investment products and boost the Saudi market’s appeal to local and foreign investors, the authority said, citing informed sources.

Opening new avenues for companies and investors

The framework expands funding options for unlisted firms by enabling private companies to list via SPACs, boosting liquidity and increasing IPO activity on Nomu, while giving investors access to previously hard-to-reach private companies and enhancing investment diversity.

Enhancing transparency and safeguarding rights

The rules clarify SPAC registration and offering requirements on Nomu, strengthening transparency and defining shareholder rights, while granting redemption rights under specific conditions with payouts from escrow proportional to holdings and requiring a minimum post-listing capital of SAR 100 million to support market efficiency.

Governance and deal-making controls

The framework sets conditions for mergers and acquisitions, banning sponsors or their funds from holding stakes in targets, requiring target valuation to reach at least 80% of escrow funds, and ensuring SPAC shareholders retain a minimum 30% stake after deal completion.

Empowering financial institutions

Licensed capital market institutions engaged in investment and fund management can sponsor SPACs, strengthening their role in market development and expanding participation in corporate financing.