Elliott Administration Corp seems to be to make inroads within the SPAC craze: WSJ

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Elliott Management Corp., the hedge fund best known for its high profile shareholder activist campaigns, is keen to join the buzzing SPAC craze.

ticker security Latest change Change%
T. AT & T INC. 28.93 +0.06 + 0.19%
MPC MARATHON PETROLEUM CORP 47.65 +0.32 + 0.68%
PSTH PERSHING SQUARE TONTINE 30.00 +0.35 + 1.18%

Founded by billionaire Paul Singer, the company has met with bankers to raise more than $ 1 billion for a special-purpose acquisition company, according to people familiar with the matter. They warned the process was at an early stage and plans could change.

Assuming Elliott moves forward, it could use the proceeds to buy a sizeable company – possibly in the tens of billions, based on the goals that blank check companies of similar size have agreed to agree to.

SPACs are empty shells that raise funds in search of a target to merge with and make public. They have exploded in popularity because they offer a lucrative shortcut to the public markets. So far this year, at least 116 SPACs have raised $ 35 billion, which puts the market on the right track to surpass last year’s record of over $ 80 billion, according to SPAC Research. 10 new SPACs were launched on Friday alone.

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They often have big-name investors or prominent supporters like former Yankees star Alex Rodriguez and ex-House spokesman Paul Ryan. Many of Elliott’s hedge fund competitors have already launched their own SPACs, but Elliott, a die-hard deal-maker, had been a notable absence from the party.

It’s not clear what industries Elliott might be targeting. SPACs usually give investors an idea of ​​the type of company they might be targeting, but they can easily change course.

Elliott, with approximately $ 42 billion in assets under management, has campaigned with companies as diverse as AT&T Inc. and Marathon Petroleum Corp. in recent years. MPC carried out. Evergreen Coast Capital, a private equity subsidiary, focuses on technology and was previously involved in the acquisitions of healthcare software company Athenahealth Inc. and enterprise software company LogMeIn Inc. Elliott also bought bookseller Barnes & Noble Inc. in 2019.

Elliott Management Corp., the hedge fund best known for its high profile shareholder activist campaigns, is keen to join the buzzing SPAC craze. (Photo by Thos Robinson / Getty Images for the New York Times)

Other activists with SPACs already looking for targets include 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. This makes it by far the largest SPAC of all time and prepares him to possibly achieve a very big goal. SPACs often raise additional funds in connection with a deal known as a private investment in public equity, or PIPE, that can increase deal values ​​even further.

According to data provider SPACInsider, of the hundreds of SPACs collected in recent history, only 12 have earned more than $ 1 billion in revenue. Smaller vehicles can view a larger universe of targets and raise additional funding at any time through a PIPE, said SPACInsider founder Kristi Marvin. “The argument for the larger SPAC is that it is easier to negotiate with a company when the money has already been raised,” she said.

The largest SPAC deal in 2020 brought mortgage lender United Wholesale Mortgage public, valued at around $ 16 billion, followed by a $ 12.5 billion deal to two investment firms – Owl Rock Capital Partners LP and Dyal Capital Partners – to merge and at the same time to go public.