Family Offices, Independent Sponsors Get Creative in Chasing Deals

APRIL 5, 2021

The competition for high-quality deals is more intense than ever, leaving many buyers to think outside the box for ways to win dealflow. The competitive environment is forcing family offices, like Pritzker Private Capital and Sam Zell’s Equity Group Investments, and independent sponsors, like the Grantchester Group and Rotunda Capital Partners, to look for new ways to participate.

Raising and Investing in SPACs
Special purpose acquisition companies (SPACs) are certainly the darlings of the investment world today. SPACs have raised more than $38 billion from January through mid-March, with an average of $296 million for 128 SPAC IPOs, according to SPAC Insider. That’s nearly half the money raised by SPACs in 2020. Last year, SPACs brought in a record $83 billion with an average of nearly $335 million for 248 listings.

Family offices and independent sponsors see SPACs as a way to generate returns and compete, particularly given that most private equity firms are not able to invest in SPACs, due to their agreements with limited partners.

Liz Griggs, founder of the Grantchester Group, an independent sponsor that focuses on electrification, energy and healthcare, is exploring all kinds of different strategies today, including investing in SPACs. Griggs and her partners were operators prior to launching Grantchester in 2018. Griggs founded One Call Medical, which has become the largest Workers’ Compensation ancillary care company in the U.S., with more than $1.5 billion in revenue. Armed with lots of private equity contacts and a large network, Griggs decided to become an independent sponsor.

“The SPAC market is like the dot-com era of the 1990s,” Griggs says. “It’s so hot right now. You have to be careful, but it’s a great place to generate returns. I invested in a SPAC that is electrifying cars and trucks, kind of like Tesla for commercial vehicles. It’s been a great deal, and I am already working on another SPAC.”

Other independent sponsors are doing the same. Associated Capital, the parent of Gabelli Principal Strategies, a fundless private equity vehicle, recently launched the $175 million initial public offering of its SPAC, PMV Consumer Acquisition Corp. (NYSE: PMVC) in the latter half of 2020. PMVC was created to pursue consumer companies that have an enterprise valuation in the range of $200 million to $3.5 billion.

Family offices are also turning to SPACS as a way to generate returns. The family office of Egyptian billionaire Nassef Sawiris, NNS Group, launched a $600 million SPAC called Avanti Acquisition Corp. at the end of 2020.

Additionally, the family office of Sam Zell, Equity Group Investments, also filed with the SEC at the end of the year to raise its own SPAC, Equity Distribution Acquisition Corp. Zell, who made his money through real estate holdings, is planning to target “opportunities to apply technological advancement within the industrial industry,” according to the filing papers.

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