Former trade secretary Wilbur Ross provides insight into the SPACs that replace IPOs and what industries are the country’s future.
While Donald Trump plans his next big move in the business world, could a SPAC offer be on the cards?
Several sophisticated players in the burgeoning Special Purpose Acquisition Companies business – known on Wall Street as SPACs – say that the former president and real estate mogul will be the latest celebrity to sponsor such a deal.
FOX Business was unable to confirm whether the country’s 45th president or its real estate holding company, the Trump Organization, held formal talks about creating a SPAC.
SEC PROBLEM NOTICE ABOUT CELEBRITY SPACS
The former president is best known in the business world for his opulent country clubs and high-end apartment buildings. But three senior Wall Street executives involved in the SPAC business say there is speculation in the industry that Trump is exploring potential SPAC.
Executive Vice President of the Trump Organization, Eric Trump, declined to comment on his father’s efforts, but said in a brief statement, “I’m not working on anything with any SPAC, so I just can’t comment.”
Donald Trump could not be reached for comment, and Jason Miller, a Trump adviser who recently said the former president is considering creating a social media platform, declined to comment.
Miller told Fox News on Sunday that Trump plans to “return to social media in probably about two or three months here with his own platform”.
It is unclear whether Trump’s ambitions for SPAC would be part of a possible social media game. It is conceivable that Trump could raise funds to make a social media company public, like the free-speech platform Parler.
SPACs are shell companies that do not have active commercial operations, but are listed on major exchanges where investors can buy shares. They use resources raised by their sponsors and investors to acquire other companies.
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The use of SPACs has exploded in recent years. According to research firm Zacks, SPACs raised $ 79.87 billion in gross revenue from 237 offers in 2020 – far exceeding the 59 traditional initial public offerings that raised $ 13.6 billion in 2019.
The increase in popularity occurred because it is seen as an efficient way for start-up companies to raise capital. The acquired companies do not need to make the public offer directly at the Securities and Exchange Commission, since the paperwork is filled out by SPAC itself.
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Trump would be the last big-name figure to enter the SPAC business, which has also gained popularity among sports and media titans. Former NFL quarterback and activist Colin Kaepernick started a SPAC, and everyone from the great basketball Shaquille O’Neal to singer Ciara and former New York Yankees star Alex Rodriguez has joined the wave.
Former Trump administration officials, such as the head of the National Economic Council Gary Cohn and Secretary of Commerce Wilbur Ross, have increased SPACs.
But Trump’s involvement could take financial fuss to a new level. In the weeks following the election, Trump raised more than $ 200 million from supporters eager to help him in his legal battles to challenge the validity of the 2020 vote.
These same people could easily snap up shares of a Trump SPAC, since retail investors can buy freely regulated and publicly traded shares, some SPAC insiders told FOX Business.
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Other SPAC executives say the president’s current legal problems are certain to undermine any future negotiations, even an SPAC. Many large companies announced that they would no longer work with the Trump Organization after its January 6 rally in Washington, DC, which led to the looting of the United States Capitol by some of its supporters.
He is also subject to a wide-ranging investigation by Manhattan District Attorney Cyrus Vance into possible banking and insurance fraud, FOX Business reported.