Greenhill & Company, a US investment bank with a private equity arm, will raise roughly $400 million (€274 million) for its special purpose acquisition vehicle, which began trading today on the American Stock Exchange.
A rights offering of 40 million units priced at $10 per unit is expected to close on 21 February, according to a statement. Banc of America Securities underwrote the offering.
Post-offering, the merchant bank founded by former Smith Barney chairman and chief executive Robert Greenhill will own approximately 17.5 percent of the SPAC, called GHL Acquisition Corp.
Listed under the ticker symbol “GHQ.U”, the vehicle’s units were trading at around $9.70 at press time.
SPACs are increasingly popular because they offer “a fairly simple way to get involved in the buyouts business without the lead time necessary to launch a private equity fund, as well as potentially a good platform for a roll-up strategy,” Michael Littenberg, a partner in Shulte Roth & Zable’s business transactions group, told PEO.
The vehicles appeal to investors, Littenberg added, because “SPACs mitigate the downside risk, since the IPO proceeds are placed in trust, while providing them opportunity for substantial potential upside once a deal is announced by the SPAC”.
Several former high-profile private equity general partners, such as Michael Gross from Apollo Management and Tom Hicks of Hicks Muse Tate & Furst, have become affiliated with SPACs, which have acquired companies including Jamba Juice and American Apparel.
Greenhill's private equity arm, Greenhill Capital Partners, was established in 2000 and focusses on the financial services, energy and telecommunications industries. It manages two funds that together are worth approximately $1.3 billion.
Robert Greenhill founded Greenhill & Co. in 1996. It went public in May of 2004 and currently trades on the New York Stock Exchange under the ticker symbol GHL.