Investment

Six days, 15 family offices, and SPAC mania

If the equity market crashes in 2021 – and sentiment is moving towards that view – then analysts will think SPAC mania was a lead indicator of the impending calamity. A footnote in that outcome might also be reserved for family offices. 

Of course, family offices in themselves aren’t driving the boom but rather their billionaires and multi-millionaire owners. They, in turn, are being advised by their CEOs and CIOs looking for investments to place all their owners’ excess liquidity. 

SPACs have been a pretty good bet. Investors love them, as indicated by the amount of money pouring into them. There is a steady supply of companies wanting to merge with SPACs. So far, there is a sanguine regulatory environment around them.

Just in the last six days, 12 SPACs were registered with backing from family offices. Prominent ones include MSD Acquisition Corp., backed by Michael Dell’s family office MSD Capital, and his multi-family office, MSD Partners. And Barry Sternlicht’s family office Jaws Estate Capital backing Jaws Juggernaut Acquisition Corp. Given the feeding frenzy around SPACs, Sternlicht’s terminology for his investment vehicles could hardly be better branded. 

A full list of the family offices backing SPACs in the last six days is below. 

In the year to February 18, 144 SPACs have registered with the Securities and Exchange Commission, raising $44 billion, compared with 227 SPACs in the whole of last year, raising $76 billion, according to Dealogic. If last year analysts talked about a SPAC boom, it’s no wonder they are now talking about mania in the market. 

As Family Capital said in an article early this month, family offices drive a lot of that activity. We reckon that around one-third of new SPACs have some form of direct involvement from a family office, whereby either they have backed the sponsor and/or senior managers at a family office or are part of the management team of a blank-check company. 

The activity in the last six days indicates their appetite for SPACs isn’t diminishing – if anything, family office interest in SPACs looks to be growing, with more rich Europeans and Asians looking to jump in. Wealthy families often discover that a backing a SPAC can offer them a really easy way to make a killing on the stock market, without involving too much effort. 

Let’s hope for their sake the market keeps on supporting such exuberance – there are still plenty of bulls out there. But success cannot be guaranteed. The latest deal involving the merger of Lucid Motors with Churchill Capital IV was followed by a 27% fall in CCIV’s stock, as earlier exuberance was wiped out. The market is flagging caution elsewhere.

SPACs and their owners might be nursing plenty of sore heads by the end of the year. 

wdt_ID SPAC Family office connection Family office owner Family office based
1 Advanced Merger Partners WndrCo Ann Daly/Jeffrey Katzenberg/Sujay Jaswa Los Angeles
2 Dalio Family Office Ray Dalio New York City
3 Saddle Point Group Roy Katzovicz New York City
4 Alpha Partners Technology Merger Corp MDR Capital Mike Ryan New York City
5 B Capital Technology Opportunities Corp EE Capital Eduardo Saverin Singapore
6 BOA Acquisition Corp Seligman Group/Family Office Scott Seligman San Francisco
7 Frontier Acquisition Corp Apeiron Christian Angermayer Malta
8 Jaws Juggernaut Acquisition Corp Jaws Estates Capital Barry S. Sternlicht Greenwich, Conn
9 Jupiter Acquisition Corp Clarke Capital Partners James Clarke Provo, Utah
10 Levere Holdings Corp Jazzya Investments Martin Varsavsky Madrid, Spain
SPAC Family office connection Family office owner Family office based

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