Europe Joins Wall Street Boom In ‘Blank Check’ Firms

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‘s the monster trend on Wall Street. Now he has crossed the Atlantic. LVMH MC, founder Bernard Arnault’s -0.52% and former UniCredit UCG director, + 0.16% Jean-Pierre Mustier announced on Monday plans to create a blank check company, marking the entry Europe in the madness of special purposes. acquisition vehicles, or SPAC.

Tikehau Capital and Financière Agache, a holding company controlled by Groupe Arnault, will sponsor Pegasus Europe, which will be co-led by the former Bank of America BAC, the + 1.49% negotiator Diego De Giorgi and will seek to invest in European finance “innovative”. Business. The news comes just days after ESG Core Investments ESG, + 0.39% raised 250 million euros in an initial public offering of SPAC in Amsterdam, with the aim of buying companies focused on the environmental, social and governance space. SPACs are the top two in Europe in 2021, and only the fourth such offering in the region since the red-hot trend began in the US last year, where a record $ 102 billion was raised. globally over the past year, according to data provider Refinitiv. Only $ 132 million of that was raised on European exchanges, but now there are signs that activity is starting to pick up, as bankers, private equity groups, and venture capital funds look to create new vehicles and profit. from the frenzy.

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““ The SPACs are coming to Europe. Six months ago, this was more of a theoretical discussion, but now we are seeing a huge increase in appetite among sponsors to raise money in Europe through these vehicles. “” – Giacomo Ciampolini, Emea Alternative Equity Director, Citigroup

“SPACs are coming to Europe,” said Giacomo Ciampolini, director of alternative equity for EMEA at Citigroup C, + 0.68%. “Six months ago this was more of a theoretical discussion, but now we are seeing a huge increase in appetite among sponsors to raise money in Europe through these vehicles.” SPACs raise capital through initial public offerings and then seek out private companies to buy or merge, before going public. They have two years to close a deal or they have to return the cash, which is held in trust, to their investors. Read: Former chairman of investment bank Barclays plans to raise $ 250 million with blank check company. The SPAC frenzy has attracted some of the biggest names in European banking, but they have all avoided their home markets to raise cash in New York. Former Credit Suisse Chief Executive Officer Brady Dougan, Former Barclays Dealer Makram Azar, Former London Stock Exchange LSEG, + 0.55% from Chief Xavier Rolet, and Deutsche Bank DB, + 1.97% ex-investment bank director Garth Ritchie have raised money on US Exchanges, even as some point to European acquisitions. The technology sector has been one of the most fertile hunting grounds for SPACs, offering retail investors the opportunity to expose themselves to potential winners before they have made a profit or obtained a product. “Our goal is to enable retail investors to take advantage of innovative, high-growth companies that they would have otherwise excluded from, as more companies that have historically opted to stay private longer enter public markets earlier through these vehicles, “said Morgan Mark Yusko, CEO of Creek Capital Management. He partnered with Brady Dougan, former CEO of Credit Suisse and founder of fintech Exos Financial, to launch a third SPAC-based exchange-traded fund in January. The SPXZ ETF originated by Morgan Creek-Exos SPAC, + 1.19% will make active decisions about its holdings rather than passively track an index, and the pair plans to invest two-thirds of the money in publicly traded companies by combining with a SPAC in the last three years, and the rest in blank check companies still seeking mergers. “The great thing about a SPAC is that companies can access a broader range of investors who want to bet on innovation,” said Dougan, adding that Europe will catch up with the US, given its strong innovation centers. in Munich, London and Paris, among other cities. For some senior bankers who have launched SPAC, the United States remains the most attractive option. Azar, who unveiled its $ 300 million SPAC Golden Falcon Acquisition Corp GFX, + 0.79% in December, said the United States “is home to the deepest capital pool and the most liquid capital markets.” “For technology companies in particular, the US markets are where technology is best appreciated in terms of valuation and multiples,” added Azar. Read: Why Smarter Stock Investors Are Rejecting Most of SPAC’s IPOs Charlie Walker, director of primary equity markets at the London Stock Exchange, said that while he doesn’t see demand in London reaching the same level as in the US Due to different market dynamics, “we believe there is a demand for a significantly higher number than there is currently.” Under current UK listing rules, investors are locked in as soon as the shell company goes public with an acquisition. That may have been one of the reasons negotiator Martin Franklin abandoned plans to raise $ 750 million through Harvester Holdings on the LSE after failing to get enough interest from investors. To attract more blank check companies to Europe, Nasdaq COMP, + 0.50% earlier this month updated its rules to allow SPAC to be listed on Nordic stock exchanges. Under the new measures, SPAC’s stock trading will not stop once a deal is announced, allowing investors to withdraw money if they don’t approve of the target. Nasdaq is considering similar rules for Helsinki, Copenhagen and Reykjavik, which should help boost the number of SPACs choosing Europe as a destination for listing.