IR firm makes specialty of SPACs

Jun 25, 2008

Consultants to advise on selling target deals to shareholders

NEW YORK -- There have been boutique investment banks focused on special purpose acquisition companies (SPACs), or so-called blank-check companies. Now an IR firm, the Blueshirt Group, is specializing in them.

SPACs are a type of public company that first takes in a pool of money from investors, then puts it to work finding deals. They represented a quarter of all the US IPOs pricing in 2007, but face a rougher patch now with more shareholders rejecting target deals, according to Jonathan Schaffer, managing director of the San Francisco-based Blueshirt Group’s New York office.

Despite the recent problems, ‘it’s a very promising market,’ says Schaffer, whose nine-year old firm also does general IR consultancy. ‘A lot of deals that priced last year are coming up to a point to identify targets and move forward. That’s where we come into play.’

Michael Littenberg, a capital markets partner with Schulte Roth & Zabel, recently described SPACs to IR magazine as being ‘IR intensive,’ though highly unlikely to have someone filling an in-house IR role. That is because they put money into a trust for investment, not for building an infrastructure of employees.

The void leaves room for consultants. Schaffer says his firm will be focused especially on helping SPAC principals in the four-to-six month period between announcing their investment strategy and taking it to a shareholder vote. If a deal isn’t approved within a specified time, the principals must return the money to investors.

Schaffer has worked with two SPACs through the approval process. David Walke, senior management adviser of the Blueshirt Group, has been an investor in SPACs and is a member of the board of directors of Symphony Acquisition, a recently filed SPAC managed by EarlyBirdCapital, Morgan Joseph and Pali Capital.

The Blueshirt Group is going up against some strong existing players including Westport, Connecticut-based ICR, which says it dominates financial communications for SPACs.

By Anna Snider