Ready for another special purpose acquisition company (SPAC)? Todd Boehly, a minority owner of the Los Angeles Dodgers and owner of other sports ventures through Eldridge Industries, is sponsoring a SPAC targeting the intersection of real estate, sports, hospitality, and wellness. The SPAC will be called Cain Acquisition and is targeting a $250 million IPO.
A SPAC, often called a "blank-check" company, is specifically created to raise money to find a private company to help take public through a merger. If you're investing in a SPAC, you're essentially investing in the management team's ability to find a suitable candidate to take public in the near future. SPACs have become a very popular vehicle for taking companies public in the real estate industry.
SPAC sponsors front the costs needed to fund the SPAC's SEC filing and underwriting costs, usually around 3% of the IPO amount they're seeking. The sponsors generally receive large amounts of cheap warrants in exchange for fronting the SPAC. The sponsors are in for a big payday if a SPAC successfully acquires a target company.
What are the plans for this SPAC?
While Cain is expecting to find pandemic-induced distressed real estate opportunities, it also stated in its SEC filing, "In daily life, sports, local excursions, or leisure travel, customers are seeking unique experiences that allow them to remain connected to family, friends, and colleagues, even while not in their physical presence."
When you look at the team leading this SPAC, the vision for the acquisition makes sense. While the SPAC is being sponsored by a co-owner of the Dodgers, other sports and real estate executives are involved.
Jonathan Goldstein is the chairman, CEO, and chief financial officer of the Cain SPAC. Goldstein has directed $6 billion in investments in property deals since 2014. One of his more notable and relevant deals includes an investment into The St. James, a sports and recreation facility in Fairfax, Virginia
The SPAC also has members with professional sports operational experience on its board of directors, including Sophie Goldschmidt, former CEO of the World Surf League from 2017 to 2020. Notably, while Goldschmidt was CEO, the league announced female and male surfers would be awarded equal prize money. Goldschmidt is now an adviser to the League. She also held positions at the PGA European Tour and World Rugby Union and was a managing director at the NBA.
Nick Franklin is another notable executive involved in the deal as co-founder and president of the SPAC. A former Disney (NYSE: DIS) executive, Franklin's resume includes creating the ESPNZone restaurants, the Adventures by Disney tour business, and Disneyland Shanghai.
The Millionacres bottom line
As mentioned earlier, an investment in a SPAC is an investment in the management team's ability to find a quality company it can take public. There's no question there's some firepower on this team's bench when it comes to sports, leisure, hospitality, and real estate. However, you may be better off waiting to see if or which company they acquire before stepping up to the plate.