PropTech Acquisition Corporation Files $150M SPAC

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PropTech Acquisition Corporation Files $150M SPAC

Nov 5, 2019 INTEL by SPACInsider

Tonight, PropTech Acquisition Corporation (PTACU), filed their $150 million real estate technology-focused SPAC, with “PropTech” referring to “property technology”.  PropTech will be led by Thomas Hennessy, as Chairman of the Board, Co-Chief Executive Officer and President.  Mr. Hennessy will be joined by M. Joseph Beck, as Co-Chief Executive Officer, Chief Financial Officer and Director.  Additionally, PropTech will be advised by the Hennessy SPAC duo of Daniel Hennessy (father of Thomas) and Greg Etheridge.

The PropTech SPAC is a little unusual in that the Co-CEOs are 34 years old, which is generally about 10-20 years younger than most SPAC CEOs. However, Mr. Hennessy’s background includes being the Managing Partner of Real Estate Strategies of Hennessy Capital LLC, an alternative investment firm that focuses on the industrial services, infrastructure services and real estate industries, where he has worked since July 2019. Additionally, Mr. Hennessy served, from 2014 to 2019, as a Portfolio Manager of the Abu Dhabi Investment Authority, or ADIA, the world’s largest institutional real estate investor. Mr. Beck, the other Co-CEO, served as a Senior Investment Manager of ADIA from 2012 to 2019, working alongside Mr.Hennessy.

As stated above, the PropTech team will be focusing on “PropTech”, which, per the prospectus, is, “businesses that provide technology solutions to make the real estate industry more accessible, affordable, autonomous, connected, data-driven, digital, dynamic, efficient, experiential, flexible, productive, profitable, smart, transparent, and virtual.”  Which, to this renter, goes over my head, but, again, per the prospectus, “For example, the sharing economy catalyzed space-as-a-service operating models such as collaborative workspace and co-living, which are disrupting the office and residential sectors; modular technology and internet of things, or IoT, are reshaping property design, construction, and operations; crowdfunding platforms are expanding real estate ownership to a broader and distributed pool of participants; and the proliferation of data is allowing for the application of financial technology, or FinTech, solutions to real estate and data-driven property management, investment, and asset management tools.”  So regardless of real estate, this is essentially a tech deal, just in a different sub-sector. And tech is hot, whether it’s fintech, software, data, or PropTech, so there is certainly some possibility here.

However, this is a very young team and as far as management ages go, PropTech’s mean age of 34 years is an outlier, so let’s discuss and address it.  Most SPACs are helmed by older executives/deal makers that have amassed a substantial rolodex that means they have access to a significant amount of deal flow.  This is key because you can be the smartest person in the room, but if you don’t have access to great, available deals via your network, you’re holding an empty purse. PropTech, in addition to the current management team, will have two “Senior Advisors” with Daniel Hennessy and Greg Etheridge, and Daniel Hennessy is the eponymous “Hennessy” in the Hennesssy I, II, III and currently, IV SPACs. Obviously, they have SPAC experience in spades. Additionally, if we look at the Principal Stockholders section of the prospectus, Daniel Hennessy is a sponsor, participating in the HC PropTech Partners I LLC Group.  So he is a major stakeholder.  Clearly he will have considerable influence, regardless of the “Advisor” designation.  Is that a bad thing? No. Again, the Hennessy team has considerable SPAC experience, which is big plus, but they also have access to “all the right people” and have all the right experience.  This is 100% a “Hennessy SPAC”, with the line between father and son a little blurred.

With that being said, let’s look at the terms.  This is a 100% in trust, 1/2 warrant, 18 months SPAC. Which is interesting because Hennessy IV (Dan Hennessy’s current SPAC), has lesser terms at 101% in trust, 3/4 warrant, 18 months, despite having already completed three SPACs. The PropTech terms, on their face, if we use Hennessy IV as a comparable, would seem a bit aggressive compared to the father’s previous track record and experience. Whether that observation is justified or not will probably require a face-to-face meeting to hear the pitch. However, the prospectus first impressions would indicate some investor pushback is headed this team’s way.  Look for this deal to price right before Thanksgiving.

Summary of terms below:

Proptech terms 11-5-19

 

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