Originally published by Kori Hale, Forbes
Former NFL quarterback Colin Kaepernick is taking his talents to the public markets, alongside the NBA’s Phoenix Suns part owner Jahm Najafi with a social justice special purpose acquisition company (SPAC). A SPAC is a “blank check” shell corporation designed to take companies public without going through the traditional IPO process. Kaepernick’s SPAC, called Mission Advancement, plans to raise $287 million to acquire a billion-dollar, consumer-focused company with the potential to “generate a positive social impact,” according to its SEC filing.
The Breakdown You Need To Know:
CultureBanx reported that the Covid-19 pandemic creates uncertainty in the IPO market, and SPACs provide private companies eyeing exit opportunities, a way to go public. Nearly anyone can start a SPAC, which is enticing a cross-section of big names like athletes, activists and Wall Street executives. So far this year, there have been 131 SPACs that have raised a collective $39.9 billion, according to SPAC Research.
To make sure Mission Advancement’s board is aligned with its socially just company conscience, all directors are people of color and a majority of its members are women. Directors include Google GOOG +0.6%marketing executive Attica Jaques, former Apple AAPL +3.1% executive Omar Johnson and Birchbox co-founder and CEO Katia Beauchamp. Not to mention that they have some great advisers including Oscar-nominated filmmaker Ava DuVernay and Silicon Valley investor Ben Horowitz.
SPAC mania has taken hold of public markets and Dealogic found that through the first three-quarters of 2020, they raised more than $40 billion, compared with $13.5 billion for all of 2019. In fact, the number ofSPAC IPOs in 2020 more than doubled compared to 2019 full-year totals, according to CB Insights.
SPACS & Sports: Kaepernick is just the latest former professional athlete to jump on Wall Street’s hottest trend. NBA icon Shaquille O’Neal created a SPAC alongside one of Martin Luther King Jr.’s sons and three ex-Disney executives. Shaq and his friends SPAC, called Forest Road Acquisition, plan to raise $250 million for deals for the blank-check company, specifically to make deals in the media and technology sectors. He will serve as a strategic adviser, Martin Luther King III has been tapped as a director.MORE FOR YOUApple’s Massive iPhone 13 Upgrades Suddenly ‘Confirmed’ In New LeaksWhether Biden Cancels Student Debt Will Depend On These 3 Things$50,000? $10,000? How Much Student Loan Forgiveness Is Likely?
Forest Road plans to sell 25 million units in a public offering, the units will split into common shares, to be listed on the NYSE under the symbol FRX. They plan to acquire companies that have predictable free cash flow, formidable barriers to entry, are attractively valued, and have a platform in place for organic growth. Just last week they announced a deal to take the Beachbody fitness brand public.
SPAC IPOs are changing the future of the initial public offering. Mission Advancement will have two years from when it prices its IPO to find an acquisition in any sector, or else return the capital it raises back to investors.