Investors thirsty for deals pump most money into quirky 'blank check' companies in a decade
- Noam Gottesman and Mike Fascitelli are teaming up on a $500 million company to scour for deals in the hospitality and real estate sectors.
- Former Procter & Gamble executives are preparing their $300 million blank check company focused on consumer products.
- This is the biggest year for blank check companies since 2007.
Sign of the times: It is shaping up to be the hottest year in a decade to raise investor money for companies in the development stage with no specific business plan or purpose.
This week, a former hedge fund manager and a former real estate executive are raising $500 million to hunt for buyouts in the "blank check company" in the hospitality and real estate sectors.
Landscape Acquisition Holdings, run by Man GLG founder Noam Gottesman and former Vornado President Mike Fascitelli, could begin trading in London as early as this week. The two are putting $40 million of their own money into the blank check company and raising the rest from outside investors.
It comes the same week as former Procter & Gamble executives prepare for their $345 million Legacy Acquisition to begin trading in the U.S., focused on snapping up companies in consumer packaged goods, food, retail and restaurant sectors.
Blank check companies, also called special purpose acquisition companies, raise money from investors first and use it to buy companies later, usually within a specified time range. They are often run by former executives of the industry or sector they target. So far this year, 27 of them have begun trading in the U.S., raising $7.7 billion, the most active year since 2007, according to Renaissance Capital.
Low interest rates and high market valuations are making hedge funds and other investors itch for opportunities. Blank check companies are a place for them to put money and hope to reap any gains if the companies are successful, but recover their money if the companies fail to find suitable investments.
In September, former Facebook executive Chamath Palihapitiya rolled out a $690 million blank check company dedicated to buying a Silicon Valley "unicorn" and taking it public.
The largest this year was the $1 billion raised by Silver Run Acquisition Corp., according to Dealogic. Silver Run is managed by former Anadarko Petroleum CEO James Hackett to focus on deals in the energy sector. It recently struck a deal to combine with two Houston-area companies.
The former CEO of Starwood Hotels, Steve Heyer, recently raised $300 million for Haymaker Acquisition Corp., to look at deals in consumer-related products and services. And the private equity firm TPG raised nearly $700 million for its TPG Pace Energy Holdings earlier this year, to be run by former Occidental Petroleum CEO Stephen Chazen.
Last year, special purpose acquisition companies were 3 percent of overall IPO volume, according to Dealogic, the highest percentage since 2008 as global IPO volume fell. Exchanges have been fighting for the business as well, with Nasdaq recently proposing rule changes to make listing a blank check company there easier.
Gottesman is the former chairman and co-CEO of GLG Partners, a hedge fund sold to Man Group in 2010. He is also the co-founder of Nomad Foods, billed as Europe's largest frozen foods company, and TOMS Capital, owner of the New York restaurant Eleven Madison Park as well as the restaurant at the NoMad Hotel.
Fascitelli is the former president and CEO of Vornado Realty Trust, a real estate giant that owns Chicago's Merchandise Mart and One Penn Plaza in New York, among other properties. Both are alumni of Goldman Sachs.
The range of Landscape Acquisition's potential deals includes hotels, resorts, restaurants and gaming. The initial public offering is being handled by Morgan Stanley, Credit Suisse and Goldman Sachs.