SPAC Mania Gives Early Investors Steady Returns With Little Risk
Hedge funds score gains when blank-check companies rise after announcing deals to take startups public Private companies are flooding into special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ By Jan. 13, 2021 5:30 am ET
Sudden excitement about the flurry of startups going public through so-called blank-check companies is enriching some of the biggest players in finance, particularly hedge funds.
The gains come through the unique rights given to early investors in special-purpose acquisition companies, or SPACs, which look to acquire promising startups and take them public. As the vehicles become more popular, the hedge funds that invest in them early on, such as Magnetar Capital, Glazer Capital
Just three weeks after announcing deal discussions, Dyal Capital Partners and Owl Rock Capital Group have agreed to merge and go public via a black-check company.
The combined business will operate under the name Blue Owl Capital and oversee more than $45 billion of assets, according to an announcement Wednesday from Dyal and Owl Rock. The alternative asset manager is expected to have a market value of $12.5 billion.
Blue Owl is going public through Altimar Acquisition Corp., a special purpose acquisition company sponsored by HPS Investment Partners. Dyal, a large owner of minority stakes in alternative asset managers, already holds interest in both direct lender Owl Rock and HPS.