An acquisition-focused company will be launched this week on the London stock exchange to raise up to £ 500mn to bring a privately managed business to the listed market.
Marwyn, a London-based sponsor of European-listed acquisition companies, will this week publish its prospectus detailing plans for a form of special purpose acquisition company (Spac).
The group wants to work with existing management teams to bring their companies to the London market using an alternative version of the Spac format that aims to make it more attractive to investors. Rothschild and Investec are advising the company.
The company will be one of the few raising money on the London market this quarter. Bankers say that the market for initial public offerings has effectively been put on hold owing to the combination of the war in Ukraine and economic uncertainty.
The government has been attempting to encourage Spacs in the UK as it seeks to expand the number of public companies in London, although few have so far taken advantage of the change in rules last year that made listing in London easier.
Marwyn chair James Corsellis said the US Spac model had been discredited and attempts to replicate the model in the UK and Europe have so far stalled.
He describes the Spac market as “a Faustian pact between investment banks, income funds and promoters. . . misaligned and ill conceived ”.
Trying to replicate the US model of Spacs in Europe was “inappropriate”, with its focus on rewarding the sponsors of the float with high fees and guaranteed returns.
Spacs have attracted recent criticism in the US in particular given many of the vehicles that listed in the past two years have fallen sharply in value, burning through investor cash.
The company – which will be called Marwyn Acquisition Company II (MAC II) – is not seeking to operate within the existing LSE Spac regime. The regulatory framework and market structure of standard listed companies is suitable for its type of company, it said.
Corsellis said the Marwyn model brought in the sort of speed and confidentiality that often gave private equity buyers an advantage over a listing in London for companies seeking to raise new equity.
“The UK markets should send a signal that they are open to business and attracting the best quality talent by offering a compelling alternative to the temptation of private capital,” he said.
Marwyn is seeking to partner with an already established management team or founder who wants to use public markets to raise money to accelerate growth, or carry out mergers and acquisitions.
Marwyn has raised £ 3.5bn in equity for 11 acquisitions since 2005. The group helped bring a number of high-profile companies to the market including Entertainment Onethe media company behind Peppa Pig, Advanced Computer Software and BCA Group, the used vehicle marketplace.
A Marwyn-backed company – AdvancedAdvT – is in talks to acquire and merge with advertising group M&C Saatchi. Marwyn also has two other companies lined up to raise money after MAC II.
Marwyn said its acquisition company model provided a better alignment between the sponsor and shareholders. Management and sponsor incentives will be closely aligned to long-term equity performance, with no discounted shares or warrants offered.
The company claims that a streamlined transaction process will allow reverse acquisitions on a timetable that is comparable with private equity.
The model allows different classes of shares to be raised in advance privately that can then be converted into a public listing when the deal is struck, which allows companies’ management teams to talk with a greater degree of confidentiality and speed.