Elliot Management explores the establishment of an SPAC

Elliott Management Corp, a hedge fund known for its high-profile shareholder-activist campaign, wants to join the Ceasing SPAC Craze.

The firm, founded by billionaire Paul Singer, is meeting with bankers about raising more than $ 1 billion for a special-purpose acquisition company, according to people familiar with the matter. He warned that the process is at an early stage and plans may change.

Going forward Elliott, it could use the proceeds to buy a larger-sized company — potentially with double-digit billions in value based on blank-digit checks — with companies agreeing to combine Is expressed.

SPACs are empty shells that raise money with the sole purpose of finding a target and are made public in the process. They have exploded in popularity as they present an attractive shortcut in public markets. So far this year, at least 116 SPACs have raised $ 35 billion, according to SPAC Research, working to reach last year’s record of over $ 80 billion. 10 new SPACs were launched on Friday alone.

They often feature big-name investors or celebrity backers such as former Yankees star Alex Rodriguez and former House Speaker Paul Ryan. Many of Elliott’s hedge-fund rivals have already fielded their own SPAC, but Elliott, an accomplished deal maker, was a notable absentee from the party.

It is not clear which industries Elliot could visit. SPACs usually give investors an idea of ​​the type of company they can target, but can easily change course.

Elliott has campaigned at companies such as AT&T with approximately $ 42 billion under management. Inc.

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And Marathon Petroleum Corp

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In recent years. Its private-equity affiliate, Evergreen Coast Capital, focuses on technology, formerly health-care software firm Athenahealth Inc. and business-software company LogMeIn Inc. Participated in the acquisition of Elliott also bought bookseller Barnes & Noyers Inc. in 2019.

Other activists with SPAC already hunting for targets include Jeffrey Smith’s Starboard Value LP and William Ekman’s Pershing Square Capital Management LP. Mr. Ekman’s vehicle, Pershing Square Tontin Holdings Ltd.

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Last summer, $ 4 billion was raised, making it the largest SPAC ever and setting it up for a potentially much larger goal. SPACs known as private investments in public equity or with PIPE often raise additional funds with the deal, which can send the value of the deal even higher.

According to data provider SPACInsider, only 12 of the hundreds of SPACs raised in recent history have raised more than $ 1 billion. Smaller vehicles can see a larger universe of targets and can always raise additional financing through a PIPE, said Christy Marvin, founder of SPACInsider. “The rationale for a large SPAC is that it is easier to negotiate with a company if the money is already raised,” she said.

The largest SPAC deal in 2020 made mortgage promoter United Wholesale Mortgage Public at a valuation of $ 16 billion, and then a $ 12.5 billion deal to merge two investment firms – Owl Rock Capital Partners LP and Dial Capital Partners . .

write to Cara Lombardo at [email protected]

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