Elliott Management explores how to increase a SPAC

Assuming Elliott moves forward, it could use the proceeds to buy a sizeable company – potentially worth double-digit billions based on the goals that similarly sized blank check companies have agreed to match.

SPACs are empty shells that raise money for the sole purpose of looking for a target to merge and, in the process, make public. They have exploded in popularity because they offer a lucrative shortcut to public markets. So far this year, at least 116 SPACs have raised $ 35 billion, putting the market on track to surpass last year’s record of more than $ 80 billion, according to SPAC Research. There were 10 new SPACs launched on Friday alone.

They often feature renowned investors or celebrity sponsors, such as former Yankees star Alex Rodriguez and former mayor Paul Ryan. Many of Elliott’s hedge fund rivals have already raised their own SPACs, but Elliott, an inveterate negotiator, was a notable absence from the party.

It is unclear in which sectors Elliott may be looking. SPACs usually give investors an idea of ​​the type of company they can target, but they can easily change course.

Elliott, with about $ 42 billion under management, conducted campaigns at companies as diverse as AT&T Inc.

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and Marathon Petroleum Corp.

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in the last years. Its private equity affiliate, Evergreen Coast Capital, focuses on technology, having previously participated in the acquisitions of health software company Athenahealth Inc. and business software company LogMeIn Inc. Elliott also purchased Barnes & Noble Inc. in 2019.

Other SPAC activists 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.

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, raised $ 4 billion last summer, making it by far the largest SPAC of all time and preparing it to hit a very large target. SPACs often raise additional funds in conjunction with a transaction, known as private equity investment, or PIPE, which can send even higher transaction amounts.

Of the hundreds of SPACs surveyed in recent history, only 12 have collected revenues of more than $ 1 billion, 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 largest SPAC is that it is easier to do business with a company if the money has already been raised,” she said.

SPAC’s biggest deal in 2020 made the United Wholesale Mortgage originator publicly valued at about $ 16 billion and was followed by a $ 12.5 billion deal to merge two investment companies – Owl Rock Capital Partners LP and Dyal Capital Partners – and make them public simultaneously.

Write to Cara Lombardo at [email protected]