Which is the best celebrity management company

The second career path of many finance professionals can now be summed up with an acronym: Spac. It stands for "Special Purpose Acquisition Company" or in German: Akquisitions-Zweckunternehmen. What sounds cumbersome has been the great temptation for top bankers to become entrepreneurs themselves for a few months - after years of being employed managers of large financial institutions, they had to manage the decline rather than the departure. In any case, hardly a week passed in which not some prominent ex-manager announced a Spac: Martin Blessing dares to approach, formerly head of Commerzbank, as does Jean Pierre Mustier, most recently CEO of the major Italian bank Unicredit, or Tidjane Thiam, once Credit Suisse.

First of all, Spacs are empty shells, investment companies that collect hundreds of millions of euros from investors, although they do not initially have their own business, often only three to four employees, a website, but a listing on the stock exchange, which is something in the USA the strict regulation by the Securities and Exchange Commission. In return, they promise to buy a real company in a maximum of two years, which will slip under the cloak of the stock market shell and in whose success or failure investors can then participate - ideally, investors can get involved at an early stage and for little money young company invest before it is later worth billions.

Where will the capital for emerging European companies come from in the future?

But spacing is probably more than just a hobby for former bankers or a nice investment idea, it also involves the question of where the future capital for emerging European companies will come from and who will be in charge there. In the Corona year 2020, of all places, Spacs experienced an unexpected boom in the USA: A total of 248 such vehicles went on the US stock exchanges, collected the record sum of 83 billion dollars, half of what companies raised there via normal IPOs. In the first few weeks of the year alone, 143 American Spacs were added, who were able to win more than 44 billion dollars in investor money and also go on a shopping spree in Europe. Some are even focused on sustainable investments, which was previously considered difficult to finance.

Now the Spac wave is also spilling over to Europe after the domestic financial community initially followed the issue with skepticism, after all, similar vehicles failed more than ten years ago. The pioneer in this country is Klaus Hommels, who is not quite as prominent as the former bank bosses Blessing or Mustier, but is highly successful as a financial investor, for example as a former financier of billion-dollar companies such as Spotify, Facebook or Klarna.

This Monday, Hommel's Spac "Lakestar I" went public on the Frankfurt Stock Exchange, the first listing of its kind in more than a decade. Hommels collected a total of 275 million euros in order to later buy a tech company. Demand was significantly greater than supply, and the issue was oversubscribed nine times. His Spac is led by Stefan Winners, a former manager at Burda, among others.

The financial investor made a conscious decision in favor of Frankfurt

Hommels could have put his vehicle on the stock exchange in the USA, which would have been cheaper and easier with regard to the search for investors, but the financial investor made a conscious decision in favor of Frankfurt in order to establish and prevent the new form of financing here as well. that US Spacs are now buying European companies in a row. "It is fatal that German companies are almost exclusively financed by capital from abroad, especially when it comes to critical infrastructure such as biotech or payment transactions. We have to retain our sovereignty," says Hommels. He sees the greatest deficits in companies that are about to go public. These would need an average of 200 to 300 million euros in capital in order to be able to grow further, but they often do not get the capital from European investment funds. "That means we would be completely dependent on foreign funds, especially from the USA and China, which would then also have a corresponding influence on the companies," he says. Spacs are still not a sure-fire success with German investors. But at least: about half of its donors come from Europe, which is a comparatively high amount.

In the medium term, Spacs would also establish themselves in this country, says Thorsten Pauli, an expert on IPOs at Bank of America. Negative interest rates are a supporting factor. As a result, investors did not have a major disadvantage if their capital is invested in a Spac for one to two years without interest until the vehicle finds a takeover candidate. But of course not all Spacs would succeed. Especially since many are now looking for takeover candidates and are driving up prices.

But are US Spacs really a threat to German companies? Pius Sprenger, formerly an investment banker and now a tech investor, does not want to agree with Hommels' opinion. Together with other partners, including a prominent New York real estate investor, Sprenger has brought a Spac on the US stock exchange Nyse that focuses on "prop-tech", ie wants to buy a company that, to put it simply, digitizes the real estate industry. Sprenger is also looking for takeover candidates in Europe and Germany. "We not only offer a company listing on a US stock exchange, which goes hand in hand with a high standard of transparency and good corporate governance, but also access to the American market via our network," he says. Like Hommels, he thinks Spacs is a good opportunity to close funding gaps in Germany as well, purely in the private sector, beyond state promotional loans, as they became fashionable in the Corona crisis. At the same time, investors could also participate in venture capital for small amounts on the stock exchange, i.e. companies in the early growth phase, which is normally only possible with extremely high minimum investments. "Spacs", according to Sprenger, "thus also democratize the capital market to a certain extent".