Spotify, SPAC Wipeout Add Up to Investor Scare for Anghami Debut

All but a handful of investors in a blank-check firm that’s taking a Middle Eastern music-streaming business public have chosen to exit their holdings

The Spotify logo on a smartphone in Saint Thomas, U.S. Virgin Islands, on Saturday, January 29, 2022. Photographer: Gabby Jones/Bloomberg
February 04, 2022 | 09:28 AM

Bloomberg — All but a handful of investors in a blank-check firm that’s taking a Middle Eastern music-streaming business public have chosen to exit their holdings, the latest sign of the trouble hitting an industry that took Wall Street by storm last year.

Anghami, a rival to Spotify Technology SA, is due to start trading on the Nasdaq on Friday, a first for an Arab technology company. Its debut will come 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.

Holders of 9.8 million of the 10 million shares in Vistas Media Acquisition Company Inc., the special-purpose acquisition company -- or SPAC -- behind Anghami’s share launch have opted to return them for cash, according to a filing. The Abu Dhabi-based firm took the development in 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 share launch Friday. “We were well-prepared with a solid PIPE to compensate for this.”


Still, the redemptions underscore the waning sentiment toward SPACs as new listings get pulled and share prices slump. After a record number of transactions in 2021, 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.

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