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Nice work if you can get it.

Special purpose acquisition companies (SPACs) are all the rage. So far this year, US investors have handed over more than $4bn to such blank cheque companies, according to Dealogic, compared with $3.4bn in the whole of 2006.

Basically the individuals behind the funds raise money and then search for a company to invest in. If they find an attractive deal, they get a whopping 20 per cent of the SPAC’s equity ahead of the transaction closing. If they do not find a company within a certain time frame, the cash gets handed back to shareholders.

The skill of the managers is finding an attractive target and structuring the deal effectively. In the example of Freedom Acquisition Holdings, the biggest SPAC in the US, buying hedge fund GLG Partners, that includes details such as locking in senior managers. But the key is negotiating the right price. Just as investors buying into an initial public offering want a discount in return for taking the risk on a new company, a SPAC wants a similar reduction. The advantage is that the SPAC management team can negotiate that on a one-to-one basis. In an IPO the process is far more convoluted, with roadshows, press scrutiny and the need to convince multiple investors to buy at a certain price.

So a SPAC deal can be easier for a seller who wants a backdoor stock market listing. It looks attractive for GLG. Rather than joining a likely queue of alternative asset managers hoping to cash in on the wave of investor optimism through an IPO and leaving itself open to the vagaries of that market, GLG is taking a different tack. It is instead relying on Freedom’s more sophisticated shareholders voting in favour of a deal. Locking in an agreement with Freedom looks like a safer option if GLG’s founders want to take cash off the table.

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