FRA approves Egypt’s inaugural a special purpose acquisition company

Cairo – September 25, 2024: With the approval of Financial Regulatory Authority (FRA) earlier today, Catalyst Partners will become the first company in Egypt to establish a special purpose acquisition company (SPAC).

Catalyst Partners submitted their request to launch their SPAC “Catalyst Partners Middle East” (CPME) in July.

With an initial capital of LE 10 million, the company has committed to listing its shares on the Egyptian stock exchange within one month and plans to increase its capital to LE 100 million within three months of its listing through a private subscription limited to qualified investors and financial institutions, according to an FRA statement.

CPME aims to complete acquisitions of target companies within two years from the date of its listing, explained the FRA statement.

The establishment aligns with FRA’s recent resolutions (No. 140 and 148 of 2024) that regulate the creation and listing of SPACs, streamlining the process to attract more investments into Egypt's financial markets.

The regulatory framework now requires SPACs to submit their listing requests within one month of receiving their licenses. Failure to comply will nullify the license.

These changes aim to simplify the process for establishing SPACs, thereby enhancing market attractiveness and providing diverse investment alternatives for investors.

The new SPAC structure is intended to create a fresh financing channel for non-banking financial activities and digital platforms within the financial technology sector.

SPACs are specifically designed to raise capital through public offerings to acquire other companies across various economic sectors, the necessary funding for acquisitions is raised via private placements targeted at qualified investors and financial institutions, ensuring a streamlined and compliant investment approach.

The FRA recently amended its criteria, lowering the required liquid assets threshold for individuals from LE 10 million to LE 5 million. Foreign companies with a minimum equity of LE 50 million or its equivalent in foreign currency are now eligible to participate.