The Nigerian Exchange Ltd (NGX) has identified the Special Acquisition Compaines (SPACs) as a timely solution that will offer an alternative route to increasing the number of listings in the capital market.
The Head, Listing Business of the NGX, Mr Olumide Bolumole, said this at a webinar organised by the Exchange with the theme: “SPACs: An Alternative Route to Public Markets,” on Wednesday in Lagos.
SPAC is a company that has no commercial operations and is formed strictly to raise capital through an initial public offering (IPO) for the purpose of acquiring or merging with an existing company.
Bolumole said that the NGX would ensure consistent engagement with stakeholders to further deepen knowledge on SPACs for qualified investors and sponsors.
“In recent times, SPACs have experienced a steady rise in popularity across global markets due to the increased need for investors to explore opportunities in the capital market for diversifying investments and maximizing returns.
“At the Exchange, as we work toward becoming the preferred African exchange hub, propelling innovation in a range of areas, we have identified SPACs as a timely solution to proffer an alternative route to increasing the number of listings whilst maximieing and protecting shareholders’ value.
“The purpose of this webinar is primarily to create awareness among capital market stakeholders and investing public on the existence of this innovative vehicle as well as arouse the appetite of credible sources.
“We believe that through this webinar, we can achieve this objective ahead of the launch of SPACs in the Nigerian capital market,” he said.
The Executive Commissioner, Securities and Exchange Commission (SEC), Mr Dayo Obisan, during his goodwill remarks said that SPACs had the potential to de-risk or shorten the IPO process.
Obisan, who was represented by the Head of Securities, Investment Services, SEC, Mr Alhassan Sidi, commended the NGX for the webinar to highlight the opportunities available to the market to access financing through SPACs.
“I must commend NGX for putting this webinar together to highlight the opportunities available to the market to access financing through SPACs at a time when we need to deepen our markets.
“We will all agree that the collaborative efforts of stakeholders is more critical than ever if we will provide an enabling framework that will not only spur the development of SPACs, but will also aid in growing and deepening the market whilst ensuring that investors are properly protected,” he said.
According to him, SEC is currently in the process of developing it’s rule on SPACs in line with other rules and regulations to protect investors.
“As a tradition with the commission, it will expose the draft rules to the market for feedback,” he noted.
The Chief Executive Officer, Orango Investment, Mr Eric Guichard, said that the awareness webinar by the NGX was commendable as it was the first in the continent to talk about such advanced and sophisticated instrument.
Guichard said that Orango’s target was to take advantage of the Africa Free Trade Agreement to identify companies both on the public and private side and scaling them to take advantage of the new framework.
“We have also looked at ways of normalising African assets internationally in order to attract global capital into African markets and we believe that SPAC represents a powerful instrument that can be leveraged by various exchanges on the continent,” he said.