Gross unveils ‘blank-check’ public vehicle

Former Apollo partner Michael Gross has filed to take public a ‘blank check’ special purpose acquisition vehicle with a target of $300m, a unique next step for a veteran private equity GP.

Michael Gross, a co-founder of New York-based Apollo Management who stepped down earlier this year to pursue his own venture, has resurfaced as the chairman of a proposed special purpose acquisition vehicle (SPAC) called Marathon Acquisition.

Gross’ new venture is described in SEC filings as a “blank check company” that will acquire one or more operating businesses. The vehicle, which is seeking to raise $300 million (€234 million) through a listing on the American Stock Exchange, is being underwritten by Citigroup and Ladenburg Thalmann.

Once the initial public offering is complete, Marathon Acquisition will have 18 months to agree to a first acquisition, otherwise the cash is returned to shareholders. The prospectus notes than an acquisition target has not yet been identified, but that the firm will target businesses with strong management and cash flow.

The move is likely to be closely watched by many in the industry, as it highlights a growing convergence between the public and private markets. Earlier this month, Kohlberg Kravis Roberts raised roughly $5 billion on the Amsterdam Euronext exchange. However, that vehicle will invest across a range of private and public KKR ventures.

Gross already has experience running a public company – he was chairman of Apollo Investment, a publicly traded business development company affiliated with Apollo Management. Joining Gross on the Marathon venture are Adam Aron, the former CEO of Vail Resorts (a former Apollo portfolio company) and Martin Franklin, the former CEO of Jarden Corporation, a consumer products company. Franklin served on the board of Apollo Investment.

If successful, following the offering, Gross will own 19.8 percent of Marathon, based in New York.

The offering is to date among the largest such offerings to have been organised. Among the larger SPAC deals to have been completed in recent months has been International Shipping Enterprises’ acquisition of Navios Maritime Holding. Several dozen other SPACs have registered to go public, but not all of these have succeeded.

Gross co-founded Apollo in 1990 having worked at high-yield bond specialist Drexel Burnham Lambert throughout the 1980s.