The former head of fund of funds Centinela Capital Partners, Cesar Baez, has been working on a special purpose acquisition company that raised $40 million.
The SPAC, called BGS Acquisition Corporation, was formed last year, and Baez became chief executive officer in December. He is working with a former colleague, Julio Gutierrez, who is chairman of BGS Acquisition.
BGS Acquisition is listed on the Nasdaq, and is focused on acquiring a US or Latin American company in the media or consumer-related and hospitality sectors, Baez told Private Equity International in an interview this week. While the SPAC has raised $40 million, through the use of leverage and the capital markets it is targeting companies with enterprise values in the range of $200 million or $300 million, Baez said.
“With a SPAC, investors are looking for you to source and do an attractive transaction,” Baez said. “So if we find a good deal in another industry than the ones targeted, we could do that. So we’re not restricted to specific sectors.”
I had wanted to go back into the direct private equity business and found this is the best way to raise money quickly and go do a deal without spending two years fundraising.
SPACs have a time limit to find a deal, usually 18 months, after which they have to give back all their investor capital. Filings with the US Securities and Exchange Commission show some of the SPAC’s investors include hedge funds like AQR Management and retail investors.
“I had wanted to go back into the direct private equity business and found this is the best way to raise money quickly and go do a deal without spending two years fundraising,” Baez said.
Centinela, which Baez founded in 2005, ran the domestic emerging private equity manager programme for the California Public Employees' Retirement System, building the portfolio up to $1 billion. CalPERS recently terminated Centinela’s contract and appointed Credit Suisse’s customised funds group to run the portfolio. The pension system earlier this year allocated Credit Suisse $100 million for new commitments to domestic emerging managers.
Baez left Centinela last year after CalPERS asked the firm to remove Baez because of concerns with his relationships with “Latino” placement agents, according to claims of breach of contract and racial discrimination Centinela filed with the California Victim Compensation and Government Claims Board earlier this year. The board rejected the claim, but recommended Centinela take its claims to court.
Earlier in his career, Baez worked at the former Hicks Muse Tate & Furst, where he was colleagues with Gutierrez, an operating partner at the time.