Foley Trasimene Acquisition Corp. (WPF.U), cannonballed into the SPAC pool on Friday night, filing for a super-sized $750 million SPAC IPO. Foley Trasimene ties Trian Acquisition Corp. I, Nelson Peltz’s SPAC for size, which initially filed as a $750 million IPO back in November of 2007, making them both two of the largest initial SPAC IPO filings ever. Churchill Capital Corp. III (CCXX) topped out at $1.1 billion after upsizes and over-allotments, but only after initially filing as a $600 million SPAC. However, Foley Trasimene is keeping with the trend of big, chunky SPACs in 2020, coming on the heels of Jaws Acquisition Corp. upsizing to $500 million on the same day.
The “Foley” in Foley Trasimene is for William P. Foley, or “Bill” Foley, the Founder and Chairman of Fidelity National Financial. Mr. Foley is also the Chairman of Cannae Holdings and a Senior Managing Director of Trasimene Capital. And to the add to the CV list, Mr. Foley is also the Chairman of Dunn & Bradstreet as well as the Chairman and CEO of Black Knight Sports & Entertainment, which owns the Vegas Golden Knights hockey team. He has a couple of other Chairman and CEO roles that are too numerous to list here, but for Foley Trasimene, the SPAC, Mr. Foley will be….you guessed it…Chairman. Founder and Executive Chairman, to be exact.
Richard Massey, who is also Senior Managing Director of Trasimene Capital and CEO of Cannae Holdings, will hold the title of CEO of Foley Trasimene. Fun fact: Mr. Massey also serves as a director of FGL Holdings (FG), which is the combined company of Chinh Chu’s first SPAC – CF Corporation. SPAC Club is alive and well.
And since SPAC names are sometimes sort of interesting (Jaws, for instance), I tried to figure out what “Trasimene” was all about. A quick Google search of “Trasimene” brought up the Battle of Lake Trasimene, which was a major battle in the Second Punic War, where Hannibal executed what is considered the largest ambush in military history over the Roman army. Of the initial Roman force of about 30,000, roughly 15,000 were either killed in battle or drowned while trying to escape into the lake. I’m sure that will elicit a lot of nervous smiles from any potential target companies…
However, looking at the terms of this transaction we see a very similar structure to the CC Neuberger Principal Holdings I deal – 24 months, 1/3 warrant, ability to call the warrants for shares at $10.00 (in addition to cash and cashless exercise) as well as a big forward purchase agreement. In the case of Foley Trasimene, there are actually two FPAs for $150 million each, or $300 million total. This gives Foley $1.05 billion in fire power.
Plus, you can see that one of the FPAs is by Cannae Holdings, of which Mr. Foley and Mr. Massey are Chairman and CEO, respectively, and the other is by Thomas H. Lee Partners, L.P. (“THL”), which last sponsored Federal Street Acquisition Corp. If you recall, Federal Street combined with Universal Health Partners to create Agiliti Health. That transaction unfortunately wound up on the pink sheets (AGLY.PK) after Federal Street announced a $750 million backstop PIPE at $8.50 and as a result, nearly the entire trust was redeemed. It would be challenging for Federal Street to sponsor a new SPAC (investors would insist on onerous terms and protections), but by acting as a Forward Purchaser, it’s less of an issue.
Also, it should be noted that whereas you sometimes see Forward Purchases include hedging language, where a purchaser isn’t 100% obligated, but can choose to not participate at the time of combination, the Foley Trasimene FPAs (just like CC Neuberger’s) ARE obligated. Per the prospectus:
“These purchases will be required to be made regardless of whether any Class A common stock are redeemed by our public stockholders and are intended to provide us with a minimum funding level for our initial business combination.”
So in an ideal scenario, the $300 million FPA provides additional capital towards a purchase price, giving this team $1.05 billion in cash. However, in a worst case scenario, where there are significant investor redemptions, a target company is at least assured of a minimum $300 million at closing. That makes negotiations with a target company far easier. Particularly in an environment like right now, where redemptions are more prevalent.
All told, this is another big-name SPAC, with a big-sized IPO. However, it remains to be seen how investors will react to Foley Trasimene since last week’s disappointing IPO performance. Will investors demand more from even the brand-name teams? Jaws Acquisition Corp. will be a good litmus test and should price first. We should know more then.
Summary of terms below: