Saudi Arabia Introduces SPAC Framework on Nomu
Saudi Arabia’s Capital Market Authority (CMA) has introduced a regulatory framework for special purpose acquisition companies (SPACs) to be offered and listed on Nomu – the Parallel Market. The reform forms part of the CMA’s broader agenda to diversify capital markets products, support financing needs, and deepen market activity.
The framework creates a new path for private Saudi companies to access the public markets through a business combination rather than a traditional IPO. It also enables eligible sponsors to raise capital through a listed acquisition vehicle before identifying a target, while preserving investor protections through escrow arrangements, redemption rights, disclosure requirements, and ongoing CMA oversight.
Key takeaways
· New route to market: Private Saudi companies now have a regulated alternative to a conventional IPO.
· Nomu only: SPACs may be offered and listed only on Nomu and are therefore limited to qualified investors.
· Tight regulatory controls: The regime includes minimum capital thresholds, escrow restrictions, time limits, valuation requirements, and conflict-management safeguards.
· Execution will be decisive: The framework is likely to be used selectively by sophisticated sponsors with credible origination capability and strong governance.
Why it matters
For licensed capital market institutions, the regime creates a genuine new product opportunity. Sponsors can establish a listed vehicle and pursue a target through a negotiated transaction. That opportunity is, however, carefully constrained: minimum capital requirements, use-of-proceedsrestrictions, execution deadlines, and conflict rules mean that only sponsors with strong governance and a realistic pipeline of opportunities are likely to succeed.
For private companies, the framework offers an alternative route to the public markets that may provide more flexibility than a conventional IPO, particularly in relation to valuation, consideration structure, and transaction timing.
For qualified investors, SPACs introduce a new asset class within a regulated environment. The principal protections are the requirement to escrow most IPO proceeds and the availability of redemption rights in specified circumstances. The core investment decision, however, remains the quality of the sponsor, its sector thesis, and its ability to identify and execute the right transaction.
Core features of the regime
A Saudi SPAC must be established as a joint stock company by aCMA-licensed sponsor. The SPAC must have minimum capital of SAR 100 million, and following the IPO the sponsor must hold between 5% and 20% of the company’s share capital. The IPO is conducted through the issue of redeemable shares to incoming investors, while the sponsor holds ordinary, non-redeemable shares.
The SPAC may be listed only on Nomu, which means participation is limited to qualified investors. Following the IPO, 90% of the capital raised must be placed in escrow, with the balance available for costs and research.
Once listed, the SPAC has 24 months to complete a business combination, extendable once for up to 12 months with shareholder approval. The target must be an unlisted Saudi company, and its value must be at least 80% of the escrowed funds. The acquisition may be structured as a full or partial acquisition, provided that at least 30% of the target’s share capital is acquired.
The eventual de-SPAC transaction requires CMA approval, a shareholders’ circular, an independent valuation, and compliance with redemption and disclosure requirements. The regime also contains express conflict safeguards, including restrictions on sponsor interests in the target and voting limitations on extensions of the transaction timeline.
Our view
The CMA’s SPAC framework introduces a credible alternative to the traditional IPO route, but within a tightly controlled regulatory structure. Itis unlikely to become a mass-market product in the near term. More realistically, it will be used selectively by sophisticated sponsors and by private Saudi businesses for which a negotiated route to market is more attractive than a conventional listing.
How we can help you?
We can support clients in evaluating and implementing SPAC structures in Saudi Arabia, including:
- Structuring: assessing appropriate SPAC structures and sponsor arrangements, including governance and investor alignment;
- Regulatory: navigating CMA requirements, including eligibility, disclosure, escrow and conflict management rules;
- Listing readiness: advising on Nomu listing requirements and transaction execution timelines; and
- Transaction execution: supporting de-SPAC transactions, including target acquisition structuring, documentation and shareholder processes.
We would be pleased to discuss how the new framework may apply to your business or investment strategy.
