Business

A family office, a SPAC, and a sanction from the SEC

In space, no one can hear you scream. This is just as well for Stable Road Acquisition Corporation, a SPAC sanctioned by the SEC over its planned merger with space ferry business Momentus.

Stable Road will pay civil penalties totalling just over $1 million and Momentus will pay a $7 million fine, without admitting or denying the SEC’s claims. 

The SEC said the companies made misleading claims on the testing of its technology and underplayed the impact of national security concerns relating to the Russian nationality of its former chief executive Mikhail Kokorich. 

The SPAC is backed by Edward Freedman’s family office Stable Road Capital, not involved in the SEC sanctions. Freedman made his early fortune in payment processing and more recently invested in the cannabis sector. 

Stable Road Acquisition’s shareholders are due to vote on the merger next month. Its enterprise value was recently reduced from $1.2 billion to $700 million.

This is the first time that the SEC has taken out enforcement action against a SPAC after warning that it intended to ramp up scrutiny of the sector earlier this year, as detailed by Family Capital in April.

Since April, SPAC activity has simmered down in the US, although there has been a slight uptick in Europe. The Pinault family and banker Matthieu Pigasse has just confirmed the creation of I2PO, a SPAC aiming to raise $295 million.

It will be led by Iris Knobloch, I2PO’s chairman and chief executive who built her career at Warner. According to Bloomberg, a SPAC led by former US baseball star Alex Rodriguez is about to merge with Italian sticker manufacturer Panini.

Several SPACs are involved in financing space travel, and continue to travel towards a listing. Sir Richard Branson, founder of Virgin Galactic, born out of a SPAC, has just completed his own flight towards the edge of space. Following his trip, Virgin announced plans for a $500 million equity raising, which triggered a 22% drop in its share price.

UK-based Seraphim Space Investment Trust has just raised $178 million from investors, including Branson, whose former communications chief Will Whitehorn is chairman. He said in a statement: “Our IPO gives investors unparalleled early access to companies that will shape a new economic revolution.”

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