By Lina Saigol, Paul Clarke
The first U.S.-style blank-check company has landed in Europe, as demand for special-purpose acquisition companies, or SPACs, in the region starts to pick up amid a $100 billion surge across the Atlantic.
German technology investor Klaus Hommels on Wednesday launched a SPAC through his venture-capital firm Lakestar , which will look at buying one late-stage European tech company worth between €750 million and €4 billion ($4.8 billion).
Lakestar SPAC 1 SE is seeking to raise up to €275 million and will list in Frankfurt. It will be the third European blank-check company to launch in the space of a week, and a clear sign that the frenzy of deals that has gripped Wall Street is making its way to the continent.
It is also the first U.S.-style SPAC in Europe, allowing investors to redeem their money if they don’t approve of an acquisition target. That compares to the U.K., where investors are locked in as soon as a SPAC goes public, making many wary of participating in blank-check companies.
“Listings via SPACs can help us close the gaps that we, in Europe, traditionally have when it comes to equipping our companies with sufficient capital,” said Hommels in a statement. “The biggest needs involve companies that require €200 million to €300 million in capital to continue growing. We therefore aim to invest in a European company which historically would have needed to raise that capital from U.S. markets.”
Hommels, an early investor in streaming service Spotify /zigman2/quotes/207488629/composite SPOT -3.27% , joins former UniCredit boss Jean-Pierre Mustier , who earlier this week teamed up with LVMH /zigman2/quotes/201350549/delayed FR:MC +1.75% billionaire Bernard Arnault, Tikehau Capital and Financiere Agache to launch a SPAC in Amsterdam. That followed ESG Core Investments /zigman2/quotes/224581852/delayed NL:ESG +0.41% , which on Feb. 12 raised €250 million in the Dutch city to buy companies focused on the environmental, social and governance space.
SPACs raise equity via initial public offerings and then hunt for private companies to buy or merge with, before taking them public. They have two years to strike a deal or they have to return the cash, which is held in trust, to their investors.
Most SPACs targeting European companies launched in recent months — many of which are run by high-profile former European bank executives — have chosen to raise funds in the U.S., which has the deepest pools of liquidity.
Despite more than $100 billion in capital being raised by U.S. SPAC IPOs over the past year, according to data provider Refinitiv, Europe has barely seen any action. Before the activity in the past seven days, just $132 million had been raised by blank-check companies on European bourses.
JPMorgan /zigman2/quotes/205971034/composite JPM -2.21% is advising Lakestar on the deal. The U.S. bank this week promoted senior deal makers Guillermo Baygual and Lukasz Dziarnowski to head up a new specialist SPAC unit in Europe, the Middle East and Africa, Financial News reported .