Several well-known Montreal tech investors have joined forces to create a new special purpose acquisition company (SPAC).
The new SOAR Technology Acquisition Corp is announcing the close of its $230 million initial public offering (IPO) of 20 million units at $10 per share.
A SPAC is a “blank cheque” shell company, meant to raise money through an IPO for the purpose of acquiring an existing company.
Given SOAR’s leadership’s track record within the travel and tourism space – and the NYSE stock ticker “FLYA,” – one might reasonably guess SOAR’s target would be a company within the airline or travel tech spaces.
SOAR’s prospectus says the SPAC will target a company valued between approximately US $1 billion and $5 billion USD.
We believe there are numerous partners operating in the technology and technology-enabled industries that are well-advantaged and highly scalable with the right guidance from an acquisition partner. We are targeting a company valued between approximately $1 billion and $5 billion that has a sizable market share and capacity to achieve a market leading position. Our vast sourcing network grants us access to a wide range of investment candidates, while our structured acquisition process lends itself to rigorous diligence of underlying fundamentals and evaluation of potential expansion avenues. Our team’s public market experience allows us to mentor founders to become well equipped for the transition to public markets.
The company is headed up by Joe Poulin and his JPK Capital. Poulin’s track-record in Quebec’s tech ecosystem includes founding and later selling Luxury Retreats to Airbnb for $200 million. Poulin left Airbnb in 2019 to focus on JPK Capital.
Joining him will be inovia Capital’s Patrick Pichette and Chris Arsenault, each coming with substantial track records themselves. Pichette previously served as senior vice president and chief financial officer of Google Inc from 2008 until 2015, and now serves as the chair of the Twitter Board of Directors. He also holds board seats with Hopper, Lightspeed, LabGenius, the Trudeau Foundation and more.
No stranger to large business deals, Pichette bought the 65,000-acre Kenauk nature reserve for $40 million in 2014 with a group of partners. Kenauk is one of the largest wild tracts of private land in North America.
Arsenault, meanwhile, helped cofound inovia Capital in 2007 and recently steered the ship to its recent $450 million USD ($577 million) growth fund, announced in March.
Expedia CEO Peter Kern is also part of the new SPAC, adding even more star power. Prior to Expedia, Kern was CEO of Tribune Media and managing partner of InterMedia Partners, a private equity firm, and senior managing director at Alpine Capital.
SOAR’s marketing and comms rep told MTLinTECH that the firm is toward a 15-month window to identify the right partner company. They’ll seek a company with a global mandate, but with a focus on the United States and Canada. That target would “leverage relationships from the partners’ current portfolio and investments previously evaluated by both JPK Capital and Inovia Capital.”
SPACs are generally formed by investors, or sponsors, with expertise in a particular industry or business sector, with the intention of pursuing deals in that area, notes Investopedia. In creating a SPAC, the founders sometimes have at least one acquisition target in mind, but they don’t identify that target to avoid extensive disclosures during the IPO process.
SPACs have become more common in recent years, with their IPO fundraising hitting a record $13.6 billion in 2019—more than four times the $3.2 billion they raised in 2016. They have also attracted big-name underwriters such as Goldman Sachs, Credit Suisse, and Deutsche Bank.
Virgin Galactic, DraftKings, Fisker and Nikola are all big names that have gone public via the SPAC route over the past few years.
Not all are completely convinced of the SPAC trend, though.
Billionaire investor Sam Zell called the SPAC craze largely a “rampant speculation” reminiscent of the dot-com bubble in the 1990s.
“It’s been very rare since the dot-com bubble for tech companies to go public with zero revenue,” Jay Ritter, professor of finance at the University of Florida, told Investor’s Business Daily. “But now we’re seeing some companies with zero revenue rushing to market. History shows that has not been kind to investors.”
“The SPAC market has evolved rapidly but I don’t think current pace can continue,” added Ritter. “There is a limit as to how much the market can absorb.”