Apollo alum leads $1bn ‘blank cheque’ acquisition

Marathon Acquisition, headed by former Apollo exec Michael Gross, will buy a majority stake in Global Ship Lease, part of a growing trend of private equity execs drifting toward SPACS.

A “blank cheque” company led by Apollo Management co-founder Michael Gross has announced that it will purchase a 66 percent stake in shipping outfit Global Ship Lease in a deal valued at roughly $1 billion (€648 million).

The London-based containership company, currently a subsidiary of French logistics giant CMA CGM, will access the public markets following approval of the deal by Marathon stockholders. Marathon plans to list Global Ship Lease on the New York Stock Exchange in the early third quarter of this year.

“This transaction creates a company well positioned to capitalise on growth in global trade and positive trends in the container shipping industry,” Gross, chairman and chief executive officer of Marathon, said in a statement. “Global Ship Lease is a high-quality public story in its own right, yet it will benefit from Marathon’s sponsorships…and provide consistent dividend growth to its public stockholders.”

The transaction will include $310 million in cash from the Marathon trust account and 25.2 million Marathon shares. CMA CGM will retain a 34 percent minority interest in the shipping charter company, which will owe more than $511 million in outstanding debt after it expands its fleet in December.

Gross, among the original partners of the Leon Black-founded buyout and distress giant Apollo Management, spearheaded the $308.8 million public debut of Marathon in August 2006.  Gross’ first experience courting the public markets came in 2004, when he led the $930 million IPO of Apollo Investment Corporation, a publicly traded offshoot with significant private equity holdings. Gross is currently co-chair of the investment committee of Magnetar Capital, a hedge fund with over $4 billion in assets under management.  

Marathon is just the latest in a long list of headline-grabbing SPACS headed by former private equity heavyweights. Industry titans Tom Hicks and Ron Perelman have both formed SPACS within the last two years.

Most recently, Hicks Muse alum Michael Levitt’s blank cheque vehicle bought hedge fund giant Halcyon Asset Management for $974 million.   

SPACs have also become favored alternative fundraising vehicles for mid-level private equity firms. MBF Healthcare Partners created its own blank cheque vehicle last year with $7 million in seed money, and merchant banking specialist Tri-Artisan Capital Partners filed to create its own SPAC last month.

In contrast to traditional private equity funds, SPACs offer a significantly quicker route to fundraising—public capitalisation. If successful, SPACs often result in highly lucrative outcomes for their creators.