The Nightcap
Nightly recap of the day's SPAC highlights (March 17th, 2021)
March 17th, 2021
Good evening,
Thanks for reading “The Nightcap”, a nightly recap of all the day’s highlights in the SPAC world. In this newsletter, you will find a breakdown of the day’s deals, IPO’s, “in talks” reports, and noteworthy new SPAC S-1 filings.
Of course, you can always discover and track all of the SPACs at spactrack.net.
The SPAC Market Stats:
The Deals:
None today.
Deal News Reports:
The talks that were previously reported by Bloomberg between Apollo Strategic Growth Capital (APSG) and three Vista Equity portfolio companies: Solera Holdings, DealerSocket, and Omnitracs have been halted, according to Bloomberg. The article stated that it is unclear when or if the talks will resume.
Notable IPO’s to begin trading tomorrow:
1) Accelerate Acquisition Corp. (AAQC.U)
$400M, 1/3 warrant
Focus: Industrial, Transportation, Consumer, Retail
Officers:
Bob Nardelli (Former Chairman & CEO of The Home Depot and Former Chairman & CEO of Chrysler)
Directors:
Mark Little (Former CTO of GE)
Mark Weinberger (Former Global Chairman & CEO of Ernst & Young, Director of Metlife, Johnson & Johnson, and Saudi Aramco)
Dr. John Kelly III (Former SVP of Cognitive Solutions at IBM: oversaw IBM’s software business and Watson)
Advisors:
Lloyd Trotter (Former Vice Chairman of GE, Former CEO of GE Industrial, and Former Director of PepsiCo & Daimler A.G.)
2) Forum Merger IV Corporation (FMIV.U)
$300M, 1/4 warrant
Sponsor’s Previous SPAC to Announce a Deal: Forum Merger III (FIII) announced a merger deal with Electric Last Mile Solutions back in December. FIII closed the day at $10.26.
3) GX Acquisition Corp. II (GXII.U)
$300M, 1/3 warrant
Sponsor’s Previous SPAC to Announce a Deal: GX Acquisition Corp (GXGX) announced a merger deal with Cellularity in January. GXGX closed the day at $10.10.
4) Revolution Healthcare Acquisition Corp. (REVH.U)
$500M (50M SAIL**), 1/5 warrant
Focus: Healthcare, Healthcare Tech, Life Sciences
Sponsors: General Catalyst and ARCH
Directors:
Jeff Leiden (Executive Chairman & Former CEO of Vertex Pharmaceuticals and Former COO of Abbott Laboratories)
Robert Nelsen (Co-founder & Managing Director of ARCH)
Jennifer Schneider (Former President & Chief Medical Officer of Livongo Health)
Hemant Taneja (Managing Director of General Catalyst)
**See the end of the newsletter for the description of SAIL
Notable S-1 Filings:
1) Acropolis Infrastructure Acquisition Corp. (ACRO)
Sponsor: Apollo
$400M, 1/5 warrant
Focus: Climate infrastructure and other infrastructure
Sponsor’s Previous SPAC to Announce a Deal: Spartan Acquisition Corp. II (SPRQ) announced a merger deal with Sunlight Financial in January. SPRQ closed the day at $10.50.
2) Fifth Wall Acquisition Corp. II (FWAB)
$150M, no warrants
Focus: Real Estate
Officers:
Brendan Wallace (Co-founder and Managing Partner at Fifth Wall)
3) ICG Hypersonic Acquisition Corp. (ICGA)
$250M, 1/3 warrant
Focus: Proptech
Directors:
Jeff Blau (CEO of The Related Companies, Director of Equinox Holdings and The Wharton Graduate School)
William Lauder (Executive Chairman & Former CEO of Estée Lauder Companies, and Director of Jarden Corporation)
Peter Levine (General Partner at Andreessen Horowitz)
Andrea Olshan (Former CEO of Olshan Properties)
Henry Silverman (Former Chairman & CEO of Cendant, Former COO & Vice Chairman of Apollo Global Management)
4) Falcon Capital Acquisition Corp. II (Ticker not available yet)
$400M, 1/4 warrant
Focus: Media, Entertainment, Sports, Tech
Officers:
Alan Mnuchin (Founder & CEO of Ariliam Group)
Directors:
Karen Finerman (Co-founder & CEO of Metropolitan Capital Advisors)
Michael Ronen (Co-founder of Branded E-Commerce Group, Former Managing Partner of SoftBank Investment Advisers— commonly referred to as the Softbank Vision Fund)
Doug Band (Co-founder & Former President of Teneo, Former Deputy Assistant to President Clinton)
Jeremy Zimmer (Co-founder & CEO of United Talent Agency)
Sponsor’s Previous SPAC to Announce a Deal: Falcon Capital Acquisition Corp. (FCAC) announced a merger deal with Sharecare last month. FCAC closed the day at $10.21.
SPACs Leaving the Nest:
Newborn Acquisition Corp. (NBAC) shareholders approve the business combination with Nuuve. NBAC will trade as NVVE upon merger completion.
Roth CH Acquisition I Co (ROCH) announced the completion of its business combination with PureCycle Technologies. ROCH will trade as PCT starting tomorrow.
Upcoming Dates:
This Week’s Shareholder Meetings and Unit Splits (common shares and warrants to commence trading separately from underlying units)
Thursday, March 18th
Unit Splits: Biotech Acquisition Company (BIOT), D and Z Media Acquisition Corp. (DNZ), Hudson Executive Investment Corp. II (HCII), LMF Acquisition Opportunities (LMAO)
Friday, March 19th:
CIIG Merger Corp (CIIC) Shareholder Meeting to Approve Business Combination with Arrival
Unit Splits: Climate Real Impact Solutions II Acquisition Corporation (CLIM)
Overtime:
There is, of course, a great deal of discussion around the SPAC sponsor promote (the sponsor’s “founder shares”).
We have seen some SPAC sponsors alter or remove the sponsor promote altogether when structuring their SPACs. This includes Bill Ackman’s SPAC, Pershing Square Tontine Holdings (PSTH), and Daniel Och’s AJAX (AJAX). Further, we have seen sponsors agree to extended lockups and earnouts of the founder shares in negotiations with merger partners, like in the case of Reid Hoffman’s Reinvent Technology Partners Z (RTPZ) and Hippo.
Two banks, Morgan Stanley and Evercore, have developed alternative SPAC sponsor promote structures in order to align the sponsors better with the other investors and/or the merger partner. Morgan Stanley created “SAIL” and “SCALE”. While Evercore created “CAPS”.
SAIL: Stockholder Aligned Initial Listing
Morgan Stanley’s performance-based SPAC sponsor promote structure
SPACs using it: CBRE Acquisition Holdings, Inc. (CBAH), Health Assurance Acquisition Corp. (HAAC), Revolution Healthcare Acquisition Corp. (REVH)
From Morgan Stanley: “Instead of the SPAC sponsor receiving 20% of the equity of the vehicle (which results in immediate dilution for the target-company shareholders) irrespective of post-transaction share price performance, the SAIL promote is entirely performance based. The SAIL entitles the sponsor to an equity grant equal to a percentage of the post-merger capital appreciation on only the capital the SPAC delivers to complete the merger (not on the total equity of the combined company). The percentage is 20% for the first 30% capital appreciation and 30% for appreciation above that, with permanent high-water marks (a high-water mark refers to the SPAC’s highest peak in value, which means that if the combined company’s shares trade lower than the high-water mark, the SPAC sponsors receive no promote until the shares trade back above the high-water mark).”
https://www.morganstanley.com/ideas/spacs-IPO-alternative
CAPS: Capital which Aligns and Partners with a Sponsor
Evercore’s performance-based SPAC sponsor promote structure
SPACs using it: Executive Network Partnering Corp. (ENPC), Periphas Capital Partnering Corp (PCPC)
From Bloomberg: “Under the model, sponsors get 5% of their promote shares at the close of a deal. After that, the sponsors are paid 20% of the annual appreciation of the volume-weighted average price.”
https://www.bloomberg.com/news/articles/2021-03-06/morgan-stanley-evercore-tweak-payouts-to-spread-the-spac-wealth
SCALE: Stakeholder-Centered Aligned Listed Equity
Morgan Stanley’s SPAC sponsor promote structure that pays out over time
SPACs using it: NightDragon Acquisition Corp. (NDAC)
From Bloomberg: “Instead of the promotes being performance-based, it divides 20% of them over several years to avoid its target company being diluted immediately.”
https://www.bloomberg.com/news/articles/2021-03-06/morgan-stanley-evercore-tweak-payouts-to-spread-the-spac-wealth
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