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Special purpose acquisition companies (SPACs) may now list on the JSE thanks to a change in the JSE listings requirements effective at the end of April. A SPAC is a company consisting only of cash which is allowed to list on the Main Board or AltX on the condition that the company buys operating assets within two years.
“We’re very pleased with this amendment, as it opens up a new channel for primary capital raising for fledging investment companies,” says Patrycja Kula, Business Development Manager at the JSE. Kula believes that this change to the listings requirements will spur new listings activity both for new SPACs listings and over the longer term if SPAC portfolio investments are successful they could be listed separately.
To list on the Main Board, a company must have a minimum of R500m raised while the capital raising requirement for the AltX is R50m. As they are traded on the exchange, SPACs offer investors both liquidity and transparency. Like any other listed company, SPACs will be required to file their financial statements and disclose any material event affecting the company
According to the JSE listing requirements, capital is held in a trust until acquisitions are made and if viable assets are not acquired, the capital is to be returned to investors. This mitigates the risk that the companies would not use their capital efficiently for shareholders. It is required that directors have a direct interest in the company.
