(Bloomberg) — Middle Eastern Spotify Technology SA rival Anghami surged as much as 82% on its Nasdaq debut following its merger with a blank-check firm, even after all but a handful of investors opted to return their shares in exchange for cash.
Anghami shares opened at $17.91 on Friday, before paring some of the gains to trade around $12. It’s the first Arab technology company to list on Nasdaq and its debut comes a day after Spotify’s shares tumbled in the U.S. after disclosing a slowdown in growth, following a month of controversy involving podcast host Joe Rogan.
Special purpose acquisition companies are facing waning investor sentiment after they took Wall Street by storm last year, with high redemption rates, pulled listings and sinking share prices underscoring the troubles facing the asset class.
Holders of 9.8 million of the 10 million shares in Vistas Media Acquisition Company Inc., the SPAC behind Anghami’s float, have opted to return them for cash, according to a filing. The Abu Dhabi-based firm took the development in its stride.
“Of course this is something that has been happening lately, but we’re good with the funding that we have in place now,” Anghami Chief Executive Officer Eddy Maroun said in a Bloomberg TV interview ahead of the debut Friday. “We were well-prepared with a solid PIPE to compensate for this.”
Still, after a record number of transactions in 2021, SPAC investors are heading for the exits, with the average redemption rate jumping to 75% in January, the highest in 12 months and up from 14% a year ago, according to data from Boardroom Alpha.
The merger included a $40 million PIPE — private investment in public equity — from UAE financial firm Shuaa Capital and the SPAC sponsor, Vistas Media Capital. About 98% of Anghami’s shareholders voted in favor of the business combination. Investors who redeem shares in a SPAC still keep the warrants attached to a deal, allowing them to profit if the merger goes well.
Anghami remains focused on growth and believes profitability will follow, according to Maroun. The company is looking to move beyond the music streaming business with plans to start creating original content and introducing new initiatives including offline concerts, he said.
Stockholm-based Spotify’s shares retreated 17% on Thursday to their lowest level since May 2020. The company’s first-quarter outlook for total users and paid subscribers were shy of Wall Street forecasts.
Blank-check firms raised a record $162 billion in the U.S. alone last year, exploding in popularity in the midst of the pandemic as markets were flooded with cash and stocks hit records. But increased regulatory scrutiny, poor share performance and investor fatigue have caused the market to cool.
Just 27 SPACs have priced in the U.S. this year, raising $5.7 billion, compared with $36 billion by 116 firms a year ago, according to data compiled by Bloomberg. Seventeen SPAC offerings have been shelved so far in 2022, a record for the sector.
(Updates with share price move.)
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