Apollo co-founder Josh Harris says the SPAC trend is ‘here to stay’

Joshua Harris, Apollo Global Management Co-Founder speaks during the 2020 Delivering Alpha conference on Sept. 30th, 2020.


A notable private equity investor said Wednesday that the boom in special purpose acquisition companies was not just a passing fad.

Apollo Global Management co-founder Joshua Harris said at the Delivering Alpha conference presented by CNBC and Institutional Investor that SPACs were filling a needed role for companies that were closing in on going public. Apollo has both raised its own SPACs and exited its position in companies through the blank check vehicles, Harris said.

“The SPAC part of the IPO market is a part of the market that’s here to stay,” Harris told CNBC’s Leslie Picker.

There has been a rush of SPACs in recent months, outpacing traditional IPOs in money raised in July and August, according to Refinitiv. The companies have raised more than $30 billion so far this year. Harris estimated that SPACs have gone from 3% of the market to 20% during the recent surge. 

The investment vehicles work by going public through their own IPOs, then using their cash to do a reverse merger with a private firm. The publicly traded shares of the SPAC then become the shares of the formerly private company.

Harris said that there is a desire for a quicker process to go public than traditional IPOs and an opportunity for established investment firms like Apollo to make a company more valuable by partnering with them.

“There’s a real need for quick, confidential capital and price certainty and for sponsorship in the markets. And most of the SPACs that have been done have been more emerging growth SPACs, less cash flow more growth. And what we see is the opportunity for sponsorship,” Harris said. 

The private equity veteran said SPACs are filling a funding need for companies that are ready to go public but want to speed up the process or might be hard for investors to understand. 

“We don’t have a pocket for that right now. That just goes nowhere. So SPACs provide a real pocket for pre-IPO into IPO capital that we don’t have otherwise, and we think we also could add value to the market,” he said.  

Earlier in September, Apollo filed for an IPO for its new SPAC, Apollo Strategic Growth Capital. An amended filing last week showed that the offering was looking to raise more than $860 million. 

Apollo is not opposed to the traditional IPO process either, and Rackspace, one of its portfolio companies, took that route in August. Harris said that one time when SPACs make more sense is when existing investors are looking for “more of a cash exit. A lot of times the IPO market doesn’t want any monetization.”

Source link




Fiat Chrysler shares get a boost after revised Stellantis merger deal with PSA

MILAN — Shares in Fiat Chrysler (FCA) rose sharply in Milan on Tuesday after the car maker and French partner PSA revised the...

FCA ‘Know & Go’ owner education app debuts with 2021 Ram 1500 TRX

FCA has developed a new app called “Know & Go,” and it’s debuting with the 2021 Ram TRX. The purpose of the app...

2019 Rimac Concept_One listed for sale at Manhattan Motorcars

Croatia-based Rimac wouldn't be in a position to buy Bugatti if it hadn't released the Concept_One, its first model. It built eight examples...

Biden to mark Labor Day with union event as campaign enters homestretch

Democratic U.S. presidential nominee and former Vice President Joe Biden makes a fist as he answers questions from reporters after a speech about...

Ex-Google exec Tim Armstrong says company did not do ‘evil things’

Early Google executive Tim Armstrong told CNBC on Wednesday he believes the company did not do "evil things" to amass its dominance in...