Churchill Capital Corp. founder Michael Klein is raising $1 billion for a new SPAC

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Churchill Capital Corp. founder Michael Klein is looking to raise $1 billion for his eighth special purpose acquisition company, according to an S-1 regulatory filing from the SEC.

Klein’s Altc Acquisition Corp. plans to raise $1.0 billion by offering 100 million units at $10 each. The units contain one common share and one-sixth of a warrant share which is exercisable at $11.50.

Altc would hold a $1.3 billion valuation if the proposed deal goes through as-is. The SPAC isn’t targeting “any specific business combination target” and its common stock will be listed on the New York Stock Exchange under the ticker “ALCC.”

Citigroup, J.P. Morgan, Goldman Sachs, and Bank of America are the joint book-runners for the deal.

The former Citigroup banker Michael Klein has raised billions of dollars for seven SPACs over the past two years as a leader in the recent SPAC boom.

SPACs, or special purpose acquisition companies, are more popular than ever. In the first quarter of 2021 alone, $166 billion in SPAC merger deals were completeled, more than in all of 2020.

The rise in SPACs, along with poor returns seen from the blank check firms after going public, have caused short-sellers to triple their bets against SPACs in recent weeks.

Klein’s fourth blank check firm, Churchill Capital Corp. IV, illustrates the appeal of SPACs to short sellers.

CCIV’s stock shot up after rumors of a merger deal with the electric-vehicle maker Lucid Motors were reported on Jan 11. However, once the deal with Lucid finally went through, shares of CCIV crashed as investors balked at the combined entities’ valuation. The stock was down over 50% less than a week after the deal to acquire Lucid was officially announced.

Not long after CCIV plummeted following the Lucid deal, Klein raised $1.68 billion for his sixth and seventh SPACs.

Now Klein is joining forces with Y Combinator’s Sam Altman to raise money for another blank check firm.

Altman is well known for co-founding OpenAI and for his time at the Silicon Valley startup accelerator Y Combinator, which helped companies like Airbnb and Dropbox Inc., among others, get their start.

He adds his name to a growing list of investors, hedge fund managers, and even celebrities moving into SPACs.

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SPAC activity may be peaking right now and will slow for the rest of 2021, JPMorgan says

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Traders work on the main trading floor of the New York Stock Exchange March 21, 2007.


The end of the SPAC mania could be near, according to JPMorgan.

In a Friday note a team of quantitative strategists led by Nikolaos Panigirtzoglou said that the pace of SPAC activity in 2021 is indicating the current SPAC cycle may be ending soon.

“This year’s acceleration in SPAC activity has been so strong that [it] is more reminiscent of a peak rather than the beginning or middle of a boom SPAC cycle. This is especially true if one looks at the recent performance of SPACs,” the strategists wrote.

In just 2021 alone, there have been 248 SPAC IPOs, according to SpacInsider. However, according to JPMorgan and Bloomberg data, the performance of SPACs has disappointed in the last month.

SPACs graph

The strategists highlighted how SPACs and reverse mergers have been used for decades but appear to come and go in boom and bust cycles. The boom is driven by momentum and imitation from sponsors, investors and target companies looking to take advantage of strong demand, while the bust is driven by the emergence of poor quality players, hype dying down, and regulatory concerns.

The strategists didn’t detail when the peak would end, but said it’s reasonable to assume that the monthly pace of SPAC transactions for the remainder of 2021 will slow.

JPMorgan’s SPAC forecast comes as more investors are sounding the alarm that the rise of blank-check companies has gone too far.

Last month, Berkshire Hathaway vice-chairman Charlie Munger said the SPAC craze “must end badly,” but he isn’t sure when it will happen.

“Crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble,” Munger said. “The investment banking profession will sell sh-t as long as sh-t can be sold.”

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Billionaire Bernard Arnault is launching a SPAC, as the blank-check boom spreads to Europe

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Bernard Arnault is the fourth-richest person in the world, according to Bloomberg

Luxury goods billionaire Bernard Arnault has joined the hoards of investors and celebrities launching blank-check companies, and has teamed up with the former head of Italian financial services firm UniCredit to launch a SPAC.

The world’s fourth-richest person and owner of LVMH has teamed up with former UniCredit chief executive Jean Pierre Mustier to create a special-purpose acquisition company with a focus on “innovative” European financial firms.

A special-purpose acquisition company – or SPAC – is an entity that exists solely to list on the stock exchange to raise money, in the hope of finding and merging with a target company to take it public.

More than 140 SPACs have gone public in the US this year, raising more than $45 billion. But the SPAC boom is catching the interest of European investors. Amsterdam has emerged as a hub, although the numbers remain far smaller than in the US.

Read more: Tom Finke recounts how he went from running a $345 billion money manager to joining in the SPAC boom as a sponsor – and shares 3 characteristics investors should look for in an ideal blank-check company

Mustier and former Bank of America banker Diego De Giorgi will be the operating partners of the SPAC, which will be called Pegasus Europe and list in Amsterdam, according to the Financial Times.

Tikehau Capital and Arnault’s Financière Agache holding company will be strategic and financial sponsors. A statement released by Tikehau said they will “bring meaningful resources and support to the company.”

Arnault – who owns brands including Christian Dior, Louis Vuitton and Givenchy – is the latest in a long line of big-name SPAC sponsors. Hedge fund boss Bill Ackman floated a $4 billion SPAC last year, while former Credit Suisse boss Tidjane Thiam has one in the pipeline. 

Basket player Shaquille O’Neal and quarterback and campaigner Colin Kaepernick are among the celebrities to have backed SPACs.

Ex-Commerzbank boss Martin Blessing is reportedly planning to list a shell company in Amsterdam.

“There is in Europe a need for growth capital,” Mustier told Bloomberg TV on Monday. He said the sponsors “share the same vision, to bring capital to companies in Europe. And we chose, naturally, the financial sector to do that.”

The four sponsors plan to buy at least 10% of the SPAC’s shares at IPO, Tikehau said, and to commit to a “substantial forward purchase agreement.”

Read more: Short-seller Carson Block says the day-trading revolution that hit GameStop and other stocks is changing the playing field for investors like him. Here’s how his firm is reinventing itself – and what he’s betting against today

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SPACs will drive $300 billion in M&A activity over the next 2 years after a monstrous 2020, Goldman says

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  • Blank-check companies looking for their next target could drive $300 billion in mergers and acquisitions over the next two years, according to Goldman Sachs.
  • A hunt for yield, the shift in focus from value to growth stocks, and retail investors looking for early-stage businesses has driven investor interest in SPACs in 2020, strategists said.
  • “If this year’s 5x ratio of SPAC equity capital to target M&A enterprise value persists, the aggregate enterprise value of these future takeover targets would be $300 billion,” they noted.
  • The strategists warned that weak returns represent one headwind to future SPAC issuance.
  • Visit Business Insider’s homepage for more stories.

Blank-check companies looking to merge with or acquire another company could drive $300 billion in M&A activity over the next two years, Goldman Sachs said on Monday.

About 205 special purpose acquisition companies have raised a record $70 billion in IPO proceeds year-to-date, representing a five-fold increase from 2019, strategists led by David Kostin wrote. SPAC IPOs this year account for 52% of the $124 billion raised via 356 US IPOs.

Three major factors drove investor interest in 2020, or what they called “the year of the SPAC.” These include a shift in focus from value stocks to growth stocks, retail investors keen on non-traditional and early-stage businesses, and a hunt for cash substitutes when key policy rates are near zero.

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Goldman estimates that 205 SPACs will need to acquire a target in 2021 or 2022, based on their 24-month post-IPO expiration dates. 

Read More: JPMorgan unveils its 50 ‘most compelling’ stock picks to buy for 2021 – and details why each one will be a top performer

“If this year’s 5x ratio of SPAC equity capital to target M&A enterprise value persists, the aggregate enterprise value of these future takeover targets would be $300 billion,” the strategists said.

SPACs serve as a cheaper and faster alternative to the traditional IPO route as they are created solely to merge with or acquire other businesses, and take the merged entity public. Even after a SPAC goes public, it could take up to two years to find a desirable M&A target. If it doesn’t, the SPAC is liquidated, and funds raised are meant to be returned to investors.

2020 has seen prominent entrepreneurs, hedge-fund managers, and popular celebrities like Bill Ackman, Richard Branson, Michael Jordan, and Shaquille O’Neal become involved in SPACs, and the blank-check firms were led to market by investment banks like Morgan Stanley, Credit Suisse, and Goldman Sachs.

“We expect a high level of SPAC activity will continue into 2021,” Goldman Sachs said, and warned that weak post-acquisition returns represent a headwind to future SPAC issuance.

Read More: Buy these 28 discounted stocks from an LGBT-inclusive index that’s crushed its global benchmark since 2010, says Credit Suisse

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Legendary investor Jeremy Grantham made an accidental $265 million profit on a SPAC deal after previously criticizing blank-check companies

Jeremy Grantham
  • Jeremy Grantham’s early stake in battery producer QuantumScape has surged following the firm’s merger with a special-purpose acquisition company, but Grantham still isn’t sold on the blank-check IPO trend.
  • Grantham invested $12.5 million into the company seven years ago. That stake now stands at roughly $278 million thanks to a SPAC merger and QuantumScape’s subsequent stock rally.
  • The position is “by accident the single biggest investment I have ever made,” Grantham told the Financial Times.
  • Still, the investor sees SPACs as a “reprehensible instrument, and very very speculative by definition,” largely due to their lack of listing requirements and overall regulation.
  • Visit the Business Insider homepage for more stories.

The very kind of dealmaking that Jeremy Grantham previously deemed “reprehensible” netted the famous investor a $265 million profit.

Grantham, who founded investment management firm GMO and serves as its long-term investment strategist, invested $12.5 million in battery producer QuantumScape seven years ago as one of several stakes in early green-tech companies, according to the Financial Times. The position swelled after Kensington Capital Partners announced plans to merge QuantumScape with a special-purpose acquisition company, or SPAC, in September.

The deal valued QuantumScape at $3.3 billion, and shares traded at more than four times their listing price when the acquisition was completed on November 30. The company’s stock rallied another 31% on Tuesday alone, valuing Grantham’s stake at roughly $278 million.

Yet the legendary investor isn’t convinced Wall Street’s SPAC frenzy will last. The QuantumScape position is “by accident the single biggest investment I have ever made,” Grantham told the FT, partially fueled by the so-called blank-check companies’ lack of regulation.

“It gets around the idea of listing requirements, so it is not a useful tool for a lot of successful companies. But I think it is a reprehensible instrument, and very very speculative by definition,” he added.

Read more: We spoke with Wall Street’s 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market – and compile the biggest bets they’re making for 2021

Grantham’s profit stands to climb even higher. QuantumScape soared as much as 37% in early Wednesday trading. Should the rally hold into the market close, it would add another $100 million to his total gains. 

SPAC firms raise capital through an initial public offering with the intention of using the cash to acquire a firm and take the merged entity public. The last two years have seen market favorites including Virgin Galactic, DraftKings, and Nikola go public through such deals.

Blank-check IPOs exploded in 2020 as firms looked to take advantage of a surge in participation from retail investors and hopes for an economic recovery. More than $74 billion has been raised across 218 SPAC debuts in 2020, according to data from SPACInsider.com. That compares to just $13.6 billion raised across 59 deals in 2019.

Wall Street’s obsession with the vehicles could be a sign of unsustainable market optimism, Grantham told the FT, rivaling the overwhelming bullishness seen during the 1920s and the late-1990s tech bubble.

Tesla’s meteoric rise through the year has made electric-vehicle SPACs – and any SPAC related to the EV market – particularly popular. QuantumScape lands in that basket. The firm produces solid-state batteries used in electric cars and has backing from industry giant Volkswagen.

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