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Elliott Management Corp., the hedge fund best known for its sincere shareholder activist campaigns, would like to join the sweltering SPAC fad.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| T | AT&T INC. | 28.93 | +0.05 | + 0.16% |
| MPC | MARATHON PETROLEUM CORP | 47.65 | +0.32 | + 0.68% |
| PSTH | PERSHING SQUARE TONTINE | 30.00 | +0.35 | + 1.18% |
The people, founded by billionaire Paul Singer, met with people familiar with bankers to raise more than $ 1 billion for a specialty procurement business. They warned that the process is at an early stage and that plans could change.
Assuming Elliott moves forward, he could use the proceeds to buy a substantial company – potentially worth double-digit billions, based on the targets companies with similar blank checks have agreed to combine.
SPACs are empty shells that raise money for the sole purpose of finding a target to merge and make public in the process. They have exploded in popularity because they provide a lucrative shortcut for the public markets. So far this year, at least 116 SPACs have raised $ 35 billion, which according to SPAC Research has put the market on track through last year’s record of more than $ 80 billion. Ten new SPACs were launched on Friday alone.
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They often have big investors or celebrity supporters like former Yankees star Alex Rodriguez and former House Speaker Paul Ryan. Many of Elliott’s hedge fund competitors had already built up their own SPACs, but Elliott, an uncompromising deal, was a notable absence from the party.
It is not clear on which industries Elliott has his eye. SPACs usually give investors an idea of the type of company they can target, but can easily change course.
Elliott, with about $ 42 billion under management, has been campaigning for such diverse companies over the past year as AT&T Inc. and Marathon Petroleum Corp. The subsidiary of the private equity, Evergreen Coast Capital, focuses on technology and has previously participated in the acquisitions of the healthcare software firm Athenahealth Inc. and operating software company LogMeIn Inc.
Elliott Management Corp., the hedge fund best known for its sincere shareholder activist campaigns, would like to join the sweltering SPAC fad. (Photo by Thos Robinson / Getty Images for New York Times)
Other activists with SPACs who are already looking for targets are Jeffrey Smith’s Starboard Value LP and William Ackman’s Pershing Square Capital Management LP. Mr. Ackman’s vehicle, Pershing Square Tontine Holdings Ltd., raised $ 4 billion last summer, making it by far the largest spacecraft ever, and set him up to potentially reach a very large target. SPACs often raise additional funds in conjunction with a transaction, known as a private equity investment, or PIPE, which can increase transaction values even higher.
Of the hundreds of SPACs collected in recent history, only 12 raised more than $ 1 billion in revenue, according to data provider SPACInsider. Smaller vehicles can look at a larger universe of targets and can always raise additional funding through a PIPE, said SPACInsider founder Kristi Marvin. “The argument for the larger SPAC is that it is easier to negotiate with a company if the money has already been raised,” she said.
The largest SPAC deal in 2020 provided the United Kingdom Mortgage lender with a valuation of approximately $ 16 billion, followed by a $ 12.5 billion deal to merge two investment firms – Owl Rock Capital Partners MP and Dyal Capital Partners – and to make them public at the same time. .