In addition to Proficient Alpha, Friday evening had a bonus new IPO filing with the debut of the $250 million Gx Acquisition Corp SPAC. Gx is being led by Jay Bloom and Dean Kehler, the co-founders of Trimaran Capital. In fact, the entire management team is employed by Trimaran which manages private equity, collateralized loan obligations and hedge funds.
However, the name “Gx” is a tip-off to the team’s background since both Jay Bloom and Dean Kehler were instrumental in providing financing to the communications company Global Crossing, way back in 1998 while they were working at C.I.B.C (hence, the name “Gx”). Global Crossing endured a bit of a scandal back in 2002 for purportedly artificially inflating its revenue and it eventually filed for bankruptcy, but the financing that C.I.B.C. provided before they went public (approximately $35 million) made C.I.B.C. a cool $2 billion. That’s a nice investment and it’s no wonder this team wants to recreate a bit of that magic with a “look-back” reference to Global Crossing.
Interesting fact: Do you know who worked with Jay Bloom and Dean Kehler on the Global Crossing deal while at C.I.B.C.? None other than Andrew Heyer, from the Haymaker Acquisition Corp. team. All three came to C.I.B.C. after it acquired their investment firm, the Argosy Group, in 1995. Another fun fact: Leo Hindery, of Trine Acquisition Corp., was briefly CEO of Global Crossing in the year 2000. Tier-1 membership at SPAC Club is very “clubby”. Honestly, there really should be some sort of a get-together somewhere, at some point, for SPAC teams. THAT would be an interesting event.
However, looking at this SPAC’s structure we see, once again, 100% in trust, 24 months, 1/2 warrant with a $250 million raise. We’ve seen this structure ad nauseum this year, so there’s not too much more to say about it. Having said that, it feels appropriate for this team. They might have tried for a 1/3 of a warrant, but this is their first SPAC and these days, you need to prove yourself first before investors will let you have 1/3.
Additionally, this deal has the potential to follow in the footsteps of Hennessy IV, Trine and Act II, which saw their IPOs marketed at $250 million, then did a small up-size to $261 million, and finished up with a full over-allotment to bring the total gross proceeds to just over $300 million. Cantor was an underwriter on both Trine and Act II, so it’s a likely scenario. However, a small, $11 million up-size seems unnecessary at this point. We’ve all seen it a few times now so if the intention is to demonstrate demand, that effect no longer really works. Investors are expecting it so why not just go out with $261 million at the start? However, maybe this team really only wants to raise $250 million. We’ll find out soon enough.
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