Saudi Arabia has introduced a proposal to enhance private sector listings on its Nomu market through special purpose acquisition companies (SPACs). The Saudi SPAC proposal aims to support new listings and facilitate the process of private companies entering the public market.
The proposal, introduced by the Capital Markets Authority (CMA), invites public consultation to refine the framework and gather feedback. As part of Saudi Arabia’s broader capital market reform, this move allows SPACs to operate as joint-stock companies. These SPACs will acquire or merge with private firms that are not yet listed on the stock market.
The Saudi SPAC proposal incorporates several safeguards to protect investors. For example, SPAC sponsors must be licensed institutions, and they can hold between 5% and 20% of the SPAC’s capital. Additionally, 90% of the raised funds must be placed in a local bank escrow account, ensuring financial security. SPACs will have two years to complete a deal, with an option for a one-year extension.
Further measures prevent sponsors from holding shares in target companies, ensuring neutrality during acquisitions. Investors are also allowed to redeem their shares under specific conditions, such as disagreeing with a finalized deal.
Fahad bin Hamdan from the CMA emphasized that the proposal fits into Saudi Arabia’s larger market reforms, which aim to simplify the listing process and attract both local and global investors.
In 2024, Nomu saw 28 IPOs and three direct listings, raising around SR1.1 billion. With the Saudi SPAC proposal, the CMA hopes to increase market participation and encourage more private companies to list on the Nomu market.
The CMA is also working with tax authorities to eliminate withholding taxes on listed securities, further making investments more attractive.
This bold move could significantly impact Saudi Arabia’s market, offering new opportunities for firms and increasing Nomu’s activity.
