الهيئة العامة للرقابة المالية

• Catalyst Partners is the first SPAC with a capital of  EGP 10 million
• The establishment of the new company reflects the flexibility of the legislative and regulatory impact of FRA’s  decrees  on markets’ development
• The company shall list its shares on the Stock Exchange within a month and subsequently increase its capital to EGP 100 million within three months through a private placement limited to qualified investors and financial institutions
• The Company shall acquire target companies within two years from listing date.
• The streamlined process for identifying eligible investors facilitated the establishment of the new company by allowing indirect contributions from qualified investors.

FRA Chairman approves first SPAC pursuant to Decree No. 2323 of 2024. Catalyst Partners Middle East (CPME) becomes the inaugural Special Purpose Acquisition Company (SPAC) in Egypt with an initial capital of EGP 10 million.

Catalyst Partners has submitted a

SPAC application to the Financial Regulatory Authority (FRA) through Matouk Bassiouni & Hennawy. The proposed SPAC, “Catalyst Partners Middle East (CPME),” is a venture capital aims at acquiring NBFIs and fintech companies. This step follows the issuance of FRA’s Board decree No. 140 and 148 of 2024 regulating SPACs.

This came as a swift response to the regulatory decrees issued by the Authority, introducing amendments to listing and delisting rules. These amendments specifically regulated listing and delisting of shares of Special Purpose Acquisition Companies (SPACs) on the Stock Exchange, pursuant to Decree No. (140) and (148) of 2024 which amend Decree No. (11) of 2014.

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

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

These regulations aim to create new financing channels for non-bank financial institutions (NBFIs) and fintech startups through the Egyptian Exchange. By expanding access to capital, this move will foster growth within the fintech sector and broaden the reach of financial services.

SPACs are companies licensed by FRA solely to raise cash fund, through an initial public offering (IPO), for the purpose of acquiring or merging with an operating business (the target company), where the initial public offering (IPO) restricted to qualified investors and institutions. SPACs shall acquire the target company within a two-year timeframe from date of its initial listing and in accordance with specific regulations.

This comes after FRA’s Board of Directors, chaired by Dr. Mohamed Farid, amended the definition of a qualified investor in Decree No. 177 of 2024. The new definition includes natural persons with at least ten years of experience in asset management, investment, or direct investment, or in fields related to banking or non-banking financial activities. Additionally, qualified investor must have liquid assets, securities, or financial instruments worth at least five million Egyptian pounds instead of ten million pounds. The said decree also added foreign companies with equity of at least fifty million Egyptian pounds or its equivalent in foreign currencies to the list of qualified investors. This amendment aims to increase the number of individuals who meet the criteria to invest in company capital and to facilitate companies in meeting their ownership structure requirements.

On the other hand, FRA BOD decree No. 148 of 2024 imposed several conditions on special purpose acquisition companies (SPACs) seeking a temporary listing on the Egyptian Exchange. These conditions include a minimum issued and paid-up capital of 10 million Egyptian Pounds, a commitment to increase the capital to 100 million Egyptian Pounds within three months of listing, and a requirement to offer the additional shares through a private placement to qualified investors or financial institutions. Moreover, the information memorandum accompanying the listing application must include details such as the company’s general information, the experience of its founders and board members, target sectors, investment criteria and an investment plan for acquiring target companies, specifying the acquisition method (whether through cash, debt, or share swap)