French asset manager Tikehau Capital last week launched a blank cheque company and will hunt for acquisition targets in Europe’s financial services sector.
The Paris-headquartered firm teamed up with Financière Agache, the holding company of luxury goods group billionaire Bernard Arnault and also a shareholder in the firm, and investment bankers Jean-Pierre Mustier and Diego De Giorgi for its debut special purpose acquisition company, Pegasus Europe.
Putting balance sheet capital into a SPAC offering is a “natural extension” of Tikehau’s asset management business, Mathieu Chabran, co-founder of Tikehau, told Private Equity International.
“We look at ourselves as an asset manager, so we are not looking at a boom or an opportunity or a bubble,” Chabran said. It has also been working on the SPAC issuance for “some time now”, with some bankers approaching the firm in the last several months, he added.
Tikehau’s asset management business recorded €28.5 billion in AUM as of end-December – more than 10 percent up year-on-year. The firm invests via private equity, private debt and real assets vehicles, and through capital market strategies and its balance sheet. It mainly backs mid-sized companies’ growth through minority stakes acquisitions or financing solutions.
Chabran declined to provide details on capital raising. JPMorgan is understood to be advising on the vehicle.
Pegasus Europe will target traditional and alternative asset management platforms, fintech firms, insurance and insurance related services and diversified financial services companies, according to a statement. Chabran added that the firm wants to launch more SPACs and also plans to expand geographically and by sector.
Europe versus US
Joining the US SPAC boom does not make sense right now, according to Chabran.
“The US is a great place to raise capital… Is there a bubble in the US [SPAC market]? I don’t know, but that’s not the game we want to play,” Chabran said. “At Tikehau, we like to create, not compete.”
2020 saw a surge in activity with 248 SPACs raising $83.4 billion globally, compared with the $3.9 billion raised across 20 SPACs in 2015, according to SPAC Research. Just two months into 2021, a total of $50.2 billion has been raised across 160 SPACs, representing about three being set up each day.
Driving factors include strong equity markets, covid-19 temporarily shrinking the window for conventional initial public offerings, as well as the fear of missing out, sister title Buyouts reported.
While SPACs have enjoyed a boom beginning last year, few investors and private equity firms have entered the fray in Europe.
SPACs tend to be structured differently in the US compared with Europe – a reason why demand in the region has not been as strong, according to market sources. Under UK listing rules, for example, share trading is suspended between the time a SPAC signs a deal and the final close, which could be a period of months, as reported by Secondaries Investor. If SPAC shareholders do not like the acquisition target, they cannot trade out until the suspension is lifted, unlike in the US.
Tikehau’s move follows that of Investindustrial, which set up its own SPAC, Investindustrial Acquisition, in October and seeks to raise up to $350 million. A trio of French investors including telecoms magnate Xavier Niel and former Lazard banker Matthieu Pigasse have also set up a SPAC targeting European consumer goods in November. Earlier this month tech investor Klaus Hommels, founder of German venture capital firm Lakestar launched a €275 million SPAC in Europe.
Chabran added that SPACs in Europe have been isolated, which is the reason why the investor group chose to list Pegasus Europe in Amsterdam. “We want to be at the forefront of developing this new technology in Europe where we are known as an asset manager.”
Capital for Pegasus Europe comes from Tikehau’s balance sheet, not from its funds, which Chabran said mitigates any issues regarding fiduciary duty.
“We are also investing a very significant amount of the proceeds – collectively a minimum of 10 percent of the initial amount raised – which is unlike other SPAC managers or sponsors,” he added.