Africa is Getting in the Focus of US SPACs

Globis Acquisition Corp. (Nasdaq:GLAQ), a Special Purpose Acquisition Company (SPAC) founded by Globis Capital Advisors, a New York-based investment advisory firm founded in 2001, raised $115 million (including over-allotment) during its IPO on Dec 11, 2020. In its prospectus (S-1), Globis did not limit itself to any geographical region or any industry, but stipulated its focus on a target business that will benefit from economic globalization, particularly as it affects emerging markets.

In its acquisition strategy, Globis focused on companies that are ” sector leaders in their product category or have the potential to be dominant competitors in their sectors”, and that have “experienced management teams and corporate governance, reporting, and control systems ready to comply with the requirements of a public listing”.

Forafric is a Moroccan milling company founded in 1926, which developed into an industrial group specializing in wheat processing with twelve production sites, maintaining distribution of their products in 45 countries, with a strong focus on Africa. Forafic also produces pasta and animal nutrition products and owns two leading brands, Tria and MayMouna. In the beginning of 2021, the company commenced its acquisition strategy, acquiring milling capacity in Mali, Burkina Faso, and Niger.

Based on the Press Release by Globis, the enterprise value of the combined company is valued at approximately $300 million; its common stock is expected to be listed on the Nasdaq under the ticker symbol ‘AFRI.’ Upon the closing of the transaction, the parties intend that Globis will change its jurisdiction of incorporation to Gibraltar and be renamed Forafric Global PLC.

Africa is yet an Almost White Area on the Map of SPACs

Other that the above transaction, there are only a very few SPAC activities related to Africa.

PHP Ventures SPAC

PHP Ventures Acquisition Corp., a Special Purpose Acquisition Company (SPAC) led by CEO Marcus Choo Yeow Ngoh, who previously served as the Director of Edmark Promotions HongKong Co. Ltd., where he successfully opened up new businesses in the Middle East and Africa, focuses on consumer-facing companies with a significant Africa presence or a compelling Africa potential. PHP has raised USD 57.5 million (including over-allotment) through its Nasdaq IPO on Aug 16, 2021.

TB SA SPAC

On March 23, 2021, the SPAC TB SA Acquisition Corp raised USD 200 million at its IPO on Nasdaq. TB SA is affiliated to TowerBrook Capital Partners L.P., intends to identify a potential initial business combination target with a focus on African companies that promote ESG principles. The SPAC’s management team has strong-rooted ties to South Africa with key contacts across relevant industries and within the Sub-Saharan region generally.

African Gold SPAC

African Gold Acquisition Corporation, a SPAC that raised USD 414 million on NYSE, on Feb 26, 2021, is focusing on the gold mining industry in Africa. This SPAC has been founded by the South African entrepreneur and founder of the pan-African investment platform InvestAfrica, Robert Hersov.

Renergen Limited

The first Africa-related SPAC ever was Renergen Limited, a South African investments company focused on the alternative and renewable energy sectors in South Africa and sub-Saharan Africa. It was the first African SPAC, listed on the Johannesburg Stock Exchange (JSE) in June 2015.

Africa and SPACs

There are several reasons why Africa is not much on the map of SPACs, yet. One reason is the lack of private companies of a certain size in Africa, and that would provide an over-average growth potential. Many of the companies that do have a certain size and do have an over-average growth potential are not IPO-ready yet.

Most of the stock exchanges in Africa do not do not provide any SPAC-specific regulations, or regulations that would support SPAC listings.

It is also worth to mention that Africa-rooted SPACs might get more interest by African investors. Eghosa Omoigui, managing partner of EchoVC Partners, an early-stage VC firm focused on sub-Saharan Africa, said that that the continent could do well with more SPACs from indigenous personalities like Thiam while waiting for those from foreign entities. This will build more excitement on the continent because in most cases, it isn’t the target that people usually get enthusiastic about but the vehicle itself (source: TechCrunch).

“Sometimes you realize that it’s not really the startups that need to be hot and exciting; it is the SPAC sponsor. That’s what people are hopping on the bandwagon for”, Omoigui continued.

However, SPAC listings on African stock exchanges might bear a disadvantage. Due to the small size and liquidity of markets, shareholders that wish to sell a good part of their shares after merger might not find enough buyers.

Well, that is a clear encouragement for African investors to set up SPACs or to participate in SPACs as sponsors.

Important note:
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