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Investor mania for acquisition companies for special purposes accelerates to oil-rich Gulf, where Abu Dhabi’s sovereign wealth fund, Mubadala, is ready to launch two Spacs and a Dubai-based asset manager raises $ 200 million to go through mergers with US companies. Near East.
For months, regional financiers have been planning a booming market expansion for Spacs, or companies with blank checks, that first appear in a stock market before looking for a company to merge with.
Investment company Mubadala had approached potential investors for two Spacs focused on technology and health, people reported at the meetings.
The roadshow arrives like this Mubadala, which had record gains and growth through 2020, is reorienting its core areas of investment, outside of petrochemicals and manufacturing, into new industries such as technology, health and infrastructure. Mubadala declined to comment.
Interest in Spacs has declined in recent months after some disappointing stock price results and an increase in regulatory scrutiny in the US.
In the Gulf, however, investors have worried about losing profits. Sovereign funds and family offices also want to use the sector to boost their investment in technology and other “new economy” companies that have thrived through the pandemic.
“Suddenly, spaces are the flavor of the month here,” said a Dubai-based financier. “There’s a niche in the Middle East, Africa and South Asia; no one is looking at these markets.”
FIM Partners, a Dubai-based border asset management company backed by Egyptian investment bank EFG-Hermes, unveiled the investment this week to investors as it aims to raise $ 200 million in an initial public offering of Frontier Investment Corp on the Nasdaq, which could be announced as early as Thursday, said people with knowledge of the transaction.
The company, advised by JPMorgan, intends to merge with a goal working in technology, digital media, e-commerce or fintech in the Middle East, Africa, South Asia or Southeast Asia, they added. FIM was not available for comment and JPMorgan declined to comment.
Anghami, a regional music streaming service, said in March that it aimed to trade on the $ 220 million Nasdaq through a merger with a Singapore-based Spac.
Global Spac Partners in April raised $ 160 million on the Nasdaq to seek acquisitions in the Middle East, South Asia and Southeast Asia. The vehicle’s chief executive, Bryant Edwards, had previously worked on another Spac that in 2019 merged with a UAE-based oil services company, Brooge Energy.
Saudi Arabia’s sovereign public investment fund has also made investments in global Spacs and remains the largest shareholder in the start-up of electric vehicles Lucid Motors, which aims for a $ 24 billion valuation through a merger with a blank check company controlled by veteran distributor Michael Klein.
Middle Eastern-facing spaces faced challenges in identifying potential candidates for the merger, the Dubai-based financier said, but bankers are looking at five to ten potential targets.
Others are skeptical about the region’s ability to maintain the Spac model, saying most bids are likely to fail.
“Anyone can form a Spac. . . but everything is in the implementation “, said an investor. “The goal has to be in an attractive sector, with good growth plans and done with the right valuation; it’s complicated.”
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