M&A: Whacked by Spacs?
Who would hand over millions of dollars to a management group of a publicly listed company that does nothing, has no business strategy, has no assets and might never have any assets? But that’s what’s happening as more and more special purpose acquisition companies list. Why won’t the banks leading the deals talk about them?
Spac spat probe hits wall of silence
Special purpose acquisition companies are being listed in increasing numbers in the US and in the UK, and are attracting the attention of investment banks, mutual funds and now regulators. They are essentially cash shells. Maybe, then, this isn’t a serious market but rather one best left to hedge funds. Helen Avery tries to find out more but encounters a marked reluctance among those involved to go on the record.
“WHO WOULD HAND over millions of dollars to a management group of a publicly listed company that does nothing, has no firm business strategy, has no assets and might never have any assets?” ponders a London-based hedge fund manager. The answer? Some of the world’s most respected hedge fund managers and largest mutual funds.
Since August 2003, 50 such special purpose acquisition companies, or Spacs, have listed on the OTC Bulletin Board (OTCBB) and the American Stock Exchange (Amex), raising more than $3 billion from investors in their IPOs and generating several hundred million dollars in fees for investment banks.