Elliott management is exploring the growth of a SPAC

Assuming Elliott goes further, he could use the proceeds to buy a sizable company – potentially worth billions of double digits, based on the goals of companies with similarly uncompleted checks that agreed to combine.

SPACs are empty shells that raise money for the sole purpose of looking for a target to merge with and to be public in the process. They have exploded in popularity because they provide a profitable shortcut to public markets. So far this year, at least 116 SPACs have raised $ 35 billion, putting the market on track to return to last year’s record of more than $ 80 billion, according to SPAC Research. Only 10 new SPACs have been launched.

They often feature renowned investors or celebrity supporters, 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 SPACs, but Elliott, an inveterate trading maker, has been a notable absence from the party.

It is unclear what areas Elliott could focus on. SPACs usually give investors an idea of ​​the type of company they might be targeting, but they can easily change course.

Elliott, with about $ 42 billion in management, has campaigned for companies as diverse as AT&T Inc.

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and Marathon Petroleum Body.

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in recent years. Its private equity affiliate, Evergreen Coast Capital, focuses on technology, having previously participated in the acquisition of health care software company Athenahealth Inc. and the business software company LogMeIn Inc. Elliott also bought bookseller Barnes & Noble Inc. in 2019.

Other SPAC activists already hunting targets include Jeffrey Smith’s Starboard Value LP and William Ackman’s Pershing Square Capital Management LP. Mr. Ackman’s vehicle, Pershing Square Tontine Holdings Ltd.

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, raised $ 4 billion last summer, making it by far the largest SPAC ever and setting it to potentially achieve a very high target. SPACs often raise additional funds along with a transaction, known as a private equity investment, or PIPE, which can send transaction values ​​even higher.

Of the hundreds of SPACs collected in recent history, only 12 have grossed more than $ 1 billion, according to data provider SPACInsider. Smaller vehicles can look at a larger universe of targets and can always raise additional funding through a PIPE, said SPACInsider founder Kristi Marvin. “The argument for the larger SPAC is that it is easier to negotiate with a company if the money has already been raised,” she said.

The largest SPAC transaction in 2020 made the United Wholesale Mortgage mortgage wholesale at a valuation of about $ 16 billion and was followed by a $ 12.5 billion deal to merge two investment firms – Owl Rock Capital Partners LP and Dyal Capital Partners – and make them public simultaneously. .

Write to Cara Lombardo la [email protected]