SECP mulls special purpose acquisition companies

ISLAMABAD: In light of its vision to provide viable and sustainable ecosystem for capital formation, the Securities and Exchange Commission of Pakistan (SECP) is exploring the concept of special purpose acquisition company (SPACs), it said on Monday.

A statement said in order to introduce the SPAC, the SECP had proposed amendments to the Public Offering Regulations, 2017 to solicit public comments. “A new concept for Pakistan’s capital market, SPAC is prevailing in many jurisdictions, including USA, Canada, Malaysia etc,” the commission said.

Under the SPAC structure, a company comprises of group of persons/professionals raise funds from the general public and those funds are utilized for the purpose of merger or acquisition transaction within a permitted time frame.

A SPAC’s life begins with its initial formation (in the form of a company), followed by its IPO, its search for a target, a shareholder approval for merger/acquisition and finally, the close of an acquisition or else return of the SPAC’s proceeds back to its investors.

“Under proposed regulatory framework, SPAC shall be a company or body corporate registered with the SECP, which shall be formed by a group of persons meeting the fit and proper criteria,” the commission said adding, “The paid up-capital requirement for SPAC shall be Rs1 million and it shall raise at least Rs200 million through public offering”.

The acquisition/merger has to be completed within permitted time frame of two years, while at least 90 percent of the funds raised shall be kept in escrow account managed by a custodian.