Elliott Management explores the creation of a SPAC

Assuming Elliott goes ahead, he could use the proceeds to buy a sizable business – potentially worth double-digit billions based on the goals with which similar-sized blank check companies have agreed to combine.

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

They often feature big name investors or famous backers such as former Yankees star Alex Rodriguez and former House Speaker Paul Ryan. Many of Elliott’s hedge fund rivals have already raised their own PSPCs, but Elliott, a die-hard negotiator, had been a notable absence from the party.

It’s unclear which industries Elliott might target. PSPCs typically give investors an idea of ​​the type of business they might target, but can easily change course.

Elliott, with around $ 42 billion under management, has led campaigns at companies as diverse as AT&T Inc.

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and Marathon Petroleum Corp.

MPC 0.68%

These last years. Its private equity subsidiary, Evergreen Coast Capital, is focused on technology, having previously been involved in acquisitions of healthcare software company Athenahealth Inc. and enterprise software company LogMeIn Inc. Elliott also bought bookseller Barnes & Noble Inc. in 2019.

Other target-seeking PSPC activists include Starboard Value LP by Jeffrey Smith and Pershing Square Capital Management LP by William Ackman. Mr. Ackman’s vehicle, Pershing Square Tontine Holdings Ltd.

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, raised $ 4 billion last summer, making it by far the biggest SPAC of all time and potentially landing a really big goal. PSPCs often raise additional funds in conjunction with a transaction, known as a private equity investment, or PIPE, which can send even higher transaction values.

According to data provider SPACInsider, of the hundreds of PSPCs raised in recent history, only 12 have raised revenues of over $ 1 billion. Smaller vehicles can look at a larger universe of lenses and can still raise additional funding through a PIPE, said Kristi Marvin, founder of SPACInsider. “The argument for larger PSPC is that it’s easier to negotiate with a company if the money has already been raised,” she said.

The largest SPAC deal in 2020 took mortgage originator United Wholesale Mortgage on the stock exchange at an estimated $ 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 to make them public simultaneously.

Write to Cara Lombardo at [email protected]