Egypt’s first SPAC closed two acquisitions worth EGP 2.8 bn within months of listing — is the market moving too fast?

📈 A year and a half in, are Egypt’s SPACs moving faster than the market can handle? In 2024, the Financial Regulatory Authority (FRA) approved amendments that opened the door to establishing, listing, and trading Special Purpose Acquisition Companies (SPACs) on the Egyptian Exchange (EGX). The framework is designed to offer a faster and less complex alternative to traditional IPOs, particularly for companies in fast-growing sectors like technology and digital solutions. The question at the time: would investing in these vehicles be an attractive proposition for investors?

That question was answered quickly. The first company of this kind recently closed two acquisitions worth EGP 2.8 bn through share swaps, raising its capital to around EGP 3 bn. A second SPAC has since listed on the EGX. The more relevant question today is no longer whether the model will work but whether it is moving faster than the market’s disclosure and oversight mechanisms can keep up with.

How it started

SPACs are defined as single-purpose entities whose sole objective is to raise capital through a public or private offering in order to acquire unlisted companies. They are commonly known in global markets as blank check companies, and in Egypt they are classified as venture capital companies subject to FRA oversight. The FRA first authorized the establishment of this type of company in 2021.

In late 2024, the FRA approved the listing of the first SPAC on the Egyptian Exchange, Catalyst Partners Middle East (CPME), focused on acquiring companies operating in non-banking financial services, fintech, and payments platforms — with initial ambitions to acquire between six and 10 companies.

Then, moving quickly, in July 2025 the company’s extraordinary general assembly approved two acquisitions — targeting Qardy and Catalyst Partners Holding at a combined EGP 2.8 bn. By October 2025, the company had submitted documents to increase its issued and paid-up capital to around EGP 3 bn to finance the two agreements. In April 2026, its board approved in principle proceeding with the acquisition of a controlling stake — potentially up to the full share capital — in EIH Advisory and its subsidiaries, targeting the precious metals, gold, and related financial services sector.

The company is no longer alone in the market. The speed of the first experiment has whetted appetite among new entrants: OG Capital For Investments has recently joined the scene, putting a proposed capital increase to shareholders for a vote. Dutch private equity firm RMBV has also submitted an application to the FRA to establish its own SPAC last May, targeting windows in consumer goods, industry, education, and financial services.

More expansion, more competition. This growth signals intensifying future competition to find quality acquisition targets, which could push target company valuations up quickly, potentially to inflated levels, placing SPAC managers under greater pressure to select agreements that deliver real value to shareholders.

What Egyptian investors can learn from the global experience

Let’s rewind. The SPAC world saw a genuine boom in 2020 and 2021, raising more than USD 220 bn in capital in the US market alone. What followed was a collapse — average liquidation values fell 40% by late 2022, with some analysts arguing that SPACs had lost their luster as the financial innovation they were once imagined to be, according to a report published by the Yale Journal on Regulation.

That collapse came down to several factors that local investors can work to avoid:

#1- Lack of post-merger operational and financial readiness. Post-agreement evaluations showed that the problem in many cases wasn’t the structure of the acquisition itself — it was the absence of readiness for what came after. Companies reached closing without mature financial functions, tested internal controls, or institutional governance frameworks, only to discover that building the infrastructure required of a public company while simultaneously managing the pressure of quarterly earnings cycles was not feasible.

#2- Sponsor-investor conflicts of interest. This occurs when sponsors receive large promotional commissions in the form of shares in the post-merger entity in exchange for a nominal initial investment. Because receiving these commissions was tied to simply closing the agreement — regardless of the subsequent performance of the stock — sponsors had little incentive to concern themselves with the company’s future after the merger.

#3- Reliance on overly optimistic financial projections. When a SPAC targets companies that have not yet generated actual income or revenues, it promotes them using ambitious and unrealistic financial models. This exploits the absence of legislative liability and the forward-looking statements safe harbor that SPACs enjoyed before the US market tightened its oversight.

#4- Liquidity drain from excessive redemption rates. As investor skepticism grew, agreements saw sharp waves of share redemptions prior to merger completion, draining transactions of their value and affecting the liquidity the merged company was supposed to use for growth and operations.

Following that collapse, momentum has returned in recent months. In the first two months of this year, 50 American SPACs raised USD 10 bn — clearly outpacing traditional IPOs, which recorded 24 agreements worth USD 7 bn, according to a report by FTI Consulting. The reason: market standards changed. The companies that survived were those able to organize themselves properly and with discipline.

The road ahead

Faster than it should be? Although the FRA’s regulatory framework imposes a two-year maximum deadline for SPACs to complete their acquisitions before delisting and liquidation, the first experiment managed to close its agreement within months of listing. That pace shifts the concern from the burden of inactivity to the speed of expansion itself — raising the question of whether this velocity is genuinely serving shareholders’ interests or pushing toward inflated valuations and hasty decisions under time pressure.

Disclosure and governance challenges. The valuation procedures in this model differ from the due diligence applied in traditional IPOs, raising questions around the level of transparency — specifically regarding financial valuation mechanisms for target entities. This takes on added urgency as a single company executes multiple agreements worth bns of EGP within a matter of months, bringing us back to the question of whether the market’s current disclosure and oversight mechanisms can keep pace to protect shareholder rights.

The real test: actual companies. The true measure of the model’s success in Egypt will be whether these entities can complete deals that result in sustainable operating companies on the EGX — something the coming period will determine. Until that happens, this regulatory framework remains, at its core, a capital-raising tool and nothing more.