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Bombas founder Randy Goldberg discusses his sock company and how it is helping the homeless community.

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  • Knighthead, Certares Boost Bid to Buy Hertz From Bankruptcy

    (Bloomberg) -- The fight to buy Hertz Global Holdings Inc. out of bankruptcy is escalating after a group of investors that were previously outbid sweetened their deal to give the reorganized company an enterprise value of around $6.2 billion.The amended proposal from Knighthead Capital Management and Certares Management would pay unsecured bondholders in full, and offer existing shareholders equity in the reorganized company, according to people with knowledge of the plan who asked not to be identified discussing a private matter.The new plan includes a private placement of $750 million in reorganized stock from ad hoc equity investors that would be available to eligible shareholders, the people said. Apollo Global Management agreed to provide $2.5 billion in preferred equity financing as part of the amended proposal, the people said. The deal assigns the reorganized Hertz an equity market value of around $5.5 billion.Hertz shares surged as much as 46% Friday morning in New York to trade at $1.79.Representatives for Knighthead, Certares and Apollo declined to comment. A representative for Hertz didn’t immediately respond to a request for comment. The Wall Street Journal earlier reported on the amended plan.Hertz filed for bankruptcy in May when the near-total shutdown of the global travel industry sent its rental revenues plunging. It became a popular stock among day traders, who sent shares of the bankrupt company soaring, even though common shareholders are typically wiped out in Chapter 11 proceedings. Hertz briefly raised funds for its bankruptcy by selling stock, but abandoned the program after the Securities and Exchange Commission questioned the plan.Earlier this month, Hertz chose a rival offer from Centerbridge Partners, Warburg Pincus and Dundon Capital Partners to help it exit bankruptcy. Under that plan, supporting noteholders agreed to support the exchange of unsecured funded debt claims against Hertz for about 48.2% of the equity in the reorganized company and the right to purchase an additional $1.6 billion of shares.The sweetened offer from Knighthead gives the company a new option to consider as it works to leave court protection. Hertz aims to complete the process in June, and has put tentative restructuring terms in place for review and approval by a bankruptcy judge in Wilmington, Delaware.Hertz is rushing to exit court protection to take advantage of the hot stock market and an expected surge in summer travel as more consumers are vaccinated against Covid-19. The industry is raising prices as business and leisure travel surges and household-name rental companies don’t have enough cars for customers to drive off the lot. Firms are adding cars back to their fleets, but can only do so slowly since a semiconductor shortage has hampered production of new cars. Hertz, like rivals that didn’t file bankruptcy, sold large portions of its inventory and cut costs severely to shore up finances when U.S. travel ground to a halt last year. The amended Knighthead and Certares plan also includes $550 million of cash in a recovery pool that would pay general unsecured creditors in full, the people said. It also includes a 250 million euro ($300 million) interim financing plan to help meet the liquidity needs of Hertz’s international businesses, they added.(Updates with bankruptcy exit background in ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Huarong Debacle Highlights Problems at Hundreds of Chinese Banks

    (Bloomberg) -- Lai Xiaomin, former chairman of China Huarong Asset Management Co., was found guilty of accepting $277 million in bribes, as well as bigamy, crimes serious enough to see him summarily executed in January.Such extreme behavior -- and consequences -- are rare in any country. But in China, more modest but still flagrant mismanagement is common in the $54 trillion financial industry.In 2020 alone, the country’s top banking regulator issued almost 3,200 violations against institutions and 4,554 against individuals ranging from senior executives to rank-and-file staff; it levied fines totaling 2.3 billion yuan ($352.2 million). In the U.S., which has a much longer history of bank regulation, the Federal Reserve took 58 enforcement actions in total.Among the infractions, Chinese investigators found fabricated financial statements, executives’ nannies and chauffeurs installed as controlling shareholders, and favorable rates and sweetheart deals for investors and relatives.The state has also bailed out three poorly-run small lenders and merged dozens more since its first crackdown three years ago. Still, out of 4,400 financial institutions, 12.4% are designated at high risk for failure by the central bank. Now, the government is rewriting the commercial banking law and will have “zero tolerance” for transgressions.“Poor governance is obviously a risk for financial stability,” said Alicia Garcia Herrero, chief Asia economist of Natixis SA. If it’s contained within the country’s smallest institutions, the potential for damage is minimal, she added.“The issue is that we don’t really know whether governance problems are really contained and this is the big risk.”The past week offered a fuller picture of the costs of mismanagement and unchecked corruption. Huarong, which has around $42 billion in outstanding debt at home and abroad, delayed its earnings report in early April, beginning a spiral that’s seen its bonds fall to a record low of about 52 cents on the dollar. Its shares are down 67% since the 2015 debut and currently suspended.A China Huarong spokesperson said Thursday the company “learned the lesson from Lai Xiaomin’s case, firmly implemented central government policies, continued to eliminate the toxic influence, restored our corporate governance, accelerated business transformation and management reform, and enhanced corporate governance to move toward stable and better development.”It’s the second time in two years that creditors have been left at the mercy of bad actors. In 2019, China jolted global markets with a surprise seizure of Baoshang Bank Co., once seen as a model for funding regional economies. Triggered by the misappropriation of funds by its controlling shareholder, the takeover and eventual bankruptcy of Baoshang also called into question long-held assumptions of a perpetual government backstop.In general, the China Banking and Insurance Regulatory Commission has placed the blame for problems in the financial system on bank directors, shareholders and executives, saying in a December statement that “ineffective corporate governance is the root cause.”In one example, a rural bank lent the equivalent of 95% of its net capital to its shareholders and affiliates, according to the CBIRC, which didn’t name the bank. Most of those loans defaulted or are non-performing.The largest shareholder at one bank inflated revenues by 80 million yuan to make the institution look profitable. Elsewhere, one person and 22 of what the regulator described as his “shadow affiliates” held stakes in 17 banks, far exceeding the limits on banking ownership.The regulator has also identified bad behavior in its own ranks, putting its official in charge of oversight of the rural banks under investigation for severe disciplinary and law violations.Social media, too, has allowed employees to air grievances and reports of wrongdoing. Earlier this year, a whistle-blower at China Life Insurance Co. claimed on the social network Sina Weibo that the branch head fabricated client signatures and pocketed millions of dollars of non-existent marketing expenses. Following a CBIRC investigation, the company said in a statement that it was fined 510,000 yuan for inadequate internal controls broadly and pledged to enhance compliance education.In response to the rising risks, the central bank is revising its commercial bank law. The proposed changes include a new chapter on corporate governance, which for the first time specifies the responsibilities of shareholders and the key role of the board of directors. It also bars entities from using borrowed money to invest in banks and prohibits directors from holding posts at more than one affiliated institution.Unlike in the U.S. and Europe where misconduct and mismanagement often lead to public outcry, regulatory probes, and even high-profile firings, top leaders have been so far insulated in China. Senior executives are rarely held responsible for branch-level violations, and the financial penalties pale compared with the 1.9 trillion yuan of profit the industry earned last year.“This is work in progress,” said James Stent, author of China’s Banking Transformation and a former banker who’s spent more than a decade on the boards of two Chinese lenders. “Governance is generally good at priority large banks, but problems remain at lower level financial institutions. Addressing them will take time, and governance will always be imperfect.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • China’s Internet Stocks Face More Pain, Top Global Investors Say

    (Bloomberg) -- After a historic antitrust crackdown on China’s biggest tech companies last week, investors are betting there is more pain ahead.GAM Investments, BNP Paribas Asset Management and JP Morgan Asset Management Inc. see more regulatory tightening in China’s clampdown on monopolistic practices, putting pressure on the country’s leading internet stocks over the next few months. The Hang Seng Tech Index, where many Chinese tech giants are listed, has already lost about a quarter of its value from a rout that began mid-February.The shockwaves from Beijing’s bid to quell abuses of information and market dominance among industry leaders have left global investors pondering the prospects of China’s internet firms. The antitrust crackdown has exacerbated a global tech selloff sparked by rising bond yields, as traders forecast tighter liquidity conditions at home and abroad and lower company valuations.“Regulations for China internet companies, especially the big ones, will continue to tighten in 2021,” said Marcella Chow, global market strategist at JP Morgan Asset. “This uncertainty may act as a cap for some companies temporarily.”China slapped a record $2.8 billion fine on Alibaba Group Holding Ltd. after a four-month long investigation into the e-commerce giant’s market practices, then ordered an overhaul of Ant Group Co. Over the past week, more than 30 tech giants issued pledges to obey antitrust laws after Beijing gave them a month to conduct reviews and comply with government guidelines.READ: Jack Ma’s Double-Whammy Marks the End of China Tech’s Golden AgeAlibaba shares have slumped 23% in Hong Kong from a peak in October. Food delivery platform Meituan and tech giant Tencent Holdings Ltd., which have been on analyst radars for regulatory probes, are down 36% and 18%, respectively, from their peaks earlier this year. By contrast, the Nasdaq 100 index is up more than 8% this year despite entering a technical correction in March.Looking ahead, China’s tech companies are likely to move far more cautiously on acquisitions, over-compensate on getting signoffs from Beijing, and levy lower fees on the domestic internet traffic they dominate. This coincides with some facing delisting threats and sales curbs in the U.S., and others reverberating from a selloff sparked by Archegos Capital Management.Valuations too are serving as a deterrent for investors. Even after its decline, the Hang Seng Tech Index is trading at about 38 times its 12-month earnings estimates versus the 29 times multiple of its American counterpart.“We have already applied a valuations discount to the whole Chinese internet sector to factor in higher regulation risks,” said Jian Shi Cortesi, a Zurich-based fund manager at GAM. The $132 billion asset manager has reduced its exposure to the sector in the past few months amid high valuations, she added.Keep the FaithThat said, Beijing has moved far faster with its antitrust reforms than the U.S. and Europe have in similar efforts. The landmark case against Microsoft Corp.’s alleged software monopoly took more than half a decade of back-and-forth before settling in 2004. Current hearings involving U.S. tech titans from Google to Facebook Inc. span several fronts, multiple cases and plaintiffs, and may not see the inside of a courtroom for years to come.In contrast, Beijing regulators torpedoed Ant’s IPO the month after Ma’s infamous speech, published new rules shortly after intended to curb monopolistic practices across its internet landscape, then launched its probe into Alibaba on Christmas Eve.“Clarity reduces uncertainty, so this is a positive,” said Joshua Crabb, a portfolio manager at Robeco in Hong Kong.That has helped give investors more optimism for the long term. Money managers see the potential for tech companies to boost earnings as digital technologies catch on for everything from e-commerce and entertainment to social media, a trend that has been accelerated by the pandemic.Meanwhile, mainland traders have kept the faith. They still hold about 6.5% stake in Tencent, the highest in at least three years, according to calculations by Bloomberg based on exchange data.“Post this round of regulation scrutiny, we believe the Chinese internet industry will resume healthy growth,” GAM’s Cortesi said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Digitex (DGTX) launches zero-fee spot exchange

    Digitex, the world’s first zero-fee crypto futures exchange, has upgraded its offer this week, launching spot markets to enhance the trading experience and make onboarding new users to the exchange much easier.

  • Hedge Funds Nailed Treasuries Rout With $100 Billion in Sales

    (Bloomberg) -- Hedge funds have been a major player in this year’s Treasury selloff, offloading more than $100 billion of the securities since the start of January, according to holdings data.The world’s biggest net sales of U.S. government debt so far in 2021 has been in the financial center of the Cayman Islands, well known as a domicile for leveraged accounts. Investors there dumped $62 billion of US. sovereign bonds in February, after selling $49 billion the previous month, Treasury Department data show.The January and February selling flow also appears to offer some clues about recent price action. Treasuries rallied on Thursday despite stronger-than-expected U.S. economic data, with many participants pointing to short-covering demand as the reason.“Hedge funds overall were probably keenly involved in the rates move, but I don’t think they were alone,” said Richard Kelly, head of global strategy at Toronto-Dominion Bank. “The market broadly built up some decent short positions in a relatively short time.”U.S. 10-year yields have jumped more than 60 basis points since the end of December to trade at 1.58% on Friday. Among the catalysts for the bearish tilt were Democratic victories in the Georgia Senate run-off race that paved the way for another round of stimulus spending, and the rollout of coronavirus vaccines. Rising yields then prompted a return of convexity-type hedging flows.Hedge Fund Research Inc.’s Macro Total Index, which tracks discretionary macro managers among others, climbed 0.2% in January and clocked a 2.8% gain in February.(Updates with Toronto-Dominion Bank comment in fourth paragraph and hedge fund index data in final paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Market Wrap: Bitcoin Near $62K, Recovers Slowly From Turkey Crypto Payment Ban; Dogecoin Jumps

    “The biggest fear for many crypto traders has always been that big governments might impose harsh restrictions on cryptocurrencies,” said one analyst.

  • Replay: IPO Edge Hosts Virtual Forum and Tasting with Bespoke, Vintage Wine Estates

    IPO Edge, in partnership with The Palm Beach Hedge Fund Association, hosted a live panel and virtual tasting with Bespoke Capital Acquisition Corp. (NASDAQ: BSPE) and Vintage Wine Estates on Thursday, April 15 at 4 PM EDT. The live event features Bespoke Capital CEO Mark Harms, Vintage Wine Estates President Terry Wheatley, Vintage Wine Estates Brand Ambassador Katy […]

  • Auto Enthusiast Platform Holley Lets Investors Put the Pedal to the Metal

    Holley merging with SPAC Empower Ltd. (NYSE: EMPW) Leader in $34 billion fragmented auto enthusiast market Profitable company with 113-year legacy Sales in 2020 +25% to $580 million; 3x biggest competitor Trades at just 10x 2021 Ebitda, well below comparable companies Fox , Thule, YETI Expanding into products for performance EVs Active M&A pipeline, recently […]

  • China Says Huarong Operations Are Normal, Liquidity Ample

    (Bloomberg) -- China’s financial regulator said operations at China Huarong Asset Management Co. are normal and the company has ample liquidity, marking the first official comments aimed at easing investor concerns over the financial health of the nation’s largest bad-debt manager.The state-owned company is actively cooperating with its auditor and will complete its annual report as soon as possible, the China Banking and Insurance Regulatory Commission said in a statement. Huarong’s dollar bonds climbed, extending their rally from record lows on Thursday. A dearth of communication from Huarong and regulators on the company’s plight has unnerved investors who are seeking more details on its finances, its overhaul plans and its level of support from Beijing.Huarong, which owes $42 billion to local and offshore bondholders, jolted Asian credit markets after failing to meet a March deadline for releasing its 2020 earnings. The company was already under a shadow after its former chairman, Lai Xiaomin, was executed earlier this year after being found guilty of bribery. Under his leadership, Huarong expanded into areas including securities trading and trusts in a significant shift away from the company’s original mandate of helping banks dispose of bad debt.Huarong said earlier this week it had “adequate” liquidity and has repaid all bonds that matured on time, yet the company has declined to comment on its plans for future payments. The lack of clarity has fueled investor concerns about the potential for a debt restructuring that would be China’s most consequential since the late 1990s. Huarong’s dollar bond maturing in November climbed 4.3 cents on the dollar to 82.6 cents as of 5:35 p.m. in Hong Kong. Its yield, which approached 100% on Thursday, fell to 39%.The company’s offshore bonds began rebounding on Thursday, after reports that Huarong had funds for a full repayment of a S$600 million ($450 million) offshore note due April 27. The company’s onshore securities unit has wired funds to repay a local bond maturing Sunday, people familiar with the matter said on Friday. Huarong and its subsidiaries need to repay or refinance some $7.4 billion of local and offshore bonds this year. The company counts Warburg Pincus, Goldman Sachs Group Inc. and Malaysia’s sovereign wealth fund among its shareholders, according to data compiled by Bloomberg. The stock has dropped 67% since its 2015 listing in Hong Kong and has been halted from trading since the start of April.Hu Jianzhong, chief supervisor at Huarong, said at an event in Beijing on Friday that China will see more difficulties in bad-asset disposal market over the next three to five years as the volume rises and prices fall. Hu didn’t mention Huarong’s debt situation in the speech and declined to comment on the company’s bond repayment plan or the timing for its annual report on the sidelines of the event.The nation’s distressed loan managers are facing mounting pressure as the pandemic has made it harder to dispose of assets, according to a closely watched survey by China Orient Asset Management Co. released on Friday.Increasing credit losses at the managers themselves threaten to hurt profits and have adverse impact on their capital strength over the long term, China Orient, one the nation’s four state-owned bad-debt managers, said in the report. It also warned of growing difficulties with maturity mismatches as the companies’ liabilities are mostly short-term.Financial IndustrySeparately, China’s regulator said on Friday that the country’s banks saw their non-performing loans climb to 3.6 trillion yuan ($552 billion) as of March 31, up 118.3 billion yuan from the end of 2020. The NPL ratio eased to 1.89%, 0.02 percentage point lower than at the end of 2020.With the coronavirus largely contained and the economy rebounding, Chinese policy makers have renewed a campaign to restrain leverage and curb risks, especially in the closely managed financial and real estate sectors. Last year’s stimulus pushed debt to almost 280% of annual economic output.The central bank last month asked major lenders to curtail loan growth for the rest of this year after a surge in the first two months stoked bubble risks, people familiar with the matter have said.The economy accumulated much of its record debt pile after the global financial crisis, when it binged on credit to avoid the economic slumps ravaging the West. Efforts in 2017 to restrain debt growth, especially in the shadow-banking industry, led to higher money-market rates and a slump in government bonds.(Adds background throughout.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Britain’s Reopening Is a Boon for Outperforming Small-Cap Funds

    (Bloomberg) -- As London’s shops and pub gardens reopen for the first weekend in three months, funds targeting smaller U.K. companies are among the best performers in Europe thanks to a rally in domestic stocks that benefit from Britain’s vaccine rollout success.Among Western European stock funds with $200 million or more in assets, the majority of the 10 best performers this year are focused on U.K. small caps, according to data compiled by Bloomberg. The FTSE Small Cap Index has gained 14% in 2021 versus a rise of 11% for a benchmark tracking small stocks on euro-area exchanges.The nation’s markets are benefiting from a confluence of factors: Valuations had been depressed by the overhang of the U.K.’s departure from the European Union, and during the worst of the pandemic, when there was no economic growth, investors were will paying to pay a premium for the few companies that were enjoying rapid increases in sales. With the Brexit cloud removed and the economy rebounding as virus restrictions ease, investors are turning back to domestic stocks and those that are cheap relative to earnings.“The ability to generate a return in the U.K. market compared with the most other stock markets is very, very attractive,” said Gervais Williams, co-manager of the Premier Miton U.K. Smaller Companies Fund. Previously, the U.K. had been “very much out of fashion.”U.K. smaller companies are still inexpensive: The FTSE Small Cap sells for about 14 times estimated earnings for this year, compared to a multiple of 20.8 for the Euro Stoxx Small Index.“I’ve been investing since ‘85; I don’t think I’ve ever known this mismatch, this disparity,” said Williams, whose fund has returned 26% in 2021 with holdings including appliances retailer AO World Plc, chilled-storage provider Norish Plc and insurance investor Randall & Quilter Investment Holdings Ltd.Small caps are a traditional way of gaining exposure to the economic cycle, said James Athey, a money manager at Aberdeen Standard Investments.“That end of the company spectrum is, by far and away, most likely to have been heavily and negatively affected by lockdown, because you tend to be talking about companies that deal with these sort of parochial face-to-face services which have been essentially banned for most of this period,” Athey said by phone.English consumers have been splashing out in shops, pub gardens and hairdressers since Monday after venues were allowed to reopen following almost 100 days of being closed to control the spread of Covid-19. Britain also hit its target a few days ahead of schedule of offering a first coronavirus vaccine shot to all over-50s, as its inoculation campaign progresses faster than those of its continental neighbors.In many countries around Europe, meanwhile, restrictions remain in place, with France keeping open-air cafes closed until at least May 15 and Germany taking steps to allow the federal government to impose tighter restrictions.To be sure, it’s not just small-cap funds that are outperforming, with the continued interest in cheaper value stocks instead of high-growth companies also benefiting U.K. mid- and large-cap funds.The U.K. market, with its heavy weighting in commodity companies, is tilted toward value and cyclical shares.“There’s been a colossal rotation that we’ve been enormous beneficiaries of,” said Ian Lance, co-manager of Temple Bar Investment Trust Plc, which has returned 24% year-to-date with bets on stocks like postal group Royal Mail Plc, high street bank Natwest Group Plc and retailer Marks & Spencer Group Plc.Many of Temple Bar’s holdings were cheap even before the pandemic, so recent rallies don’t mean they are now overvalued, Lance said by phone.One issue with small caps is that they often play just one theme -- in many cases right now, the reopening -- leaving them vulnerable to any potential hiccups in the vaccine roll-out, Alexandra Jackson, manager of the Rathbone U.K. Opportunities Fund, said in an interview.Slightly larger companies that might prove to be less “binary” in that sense include Softcat Plc, a technology infrastructure group that also offers work-from-home tech, and construction retailers like Howden Joinery Group Plc and Grafton Group Plc, which should benefit from an elevated interest in home improvements even after people get used to post-lockdown life, said Jackson, whose fund is up 7.4% this year.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Gold Set For Best Week Since December With Yields Retreating

    (Bloomberg) -- Gold headed for its best week since December amid a retreat in bond yields and a report that top buyer China may import more of the metal.After weeks trading in a narrow range, gold has advanced as Treasuries yields and the dollar head for weekly losses. Lower yields boost the appeal of bullion, which doesn’t offer interest. Dollar declines helped spur a broad rally in raw materials, with the Bloomberg Commodity Index also on track for its best week of 2021.Bullion is showing tentative signs of breaking out of a slump following three straight monthly losses. Prices rose above the 50-day moving average on Thursday, a positive signal for traders who follow chart patterns. On Friday, bullion extended gains to the highest since February after Reuters reported that China has given banks permission to import a large amount of bullion to meet domestic demand.The overall robust performance in commodities this week was “being supported by a surprise drop in U.S. Treasury yields accompanied by a weaker dollar,” said Ole Hansen, head of commodities research at Saxo Bank. Gold, along with crude oil and copper, “broke higher, thereby potentially signaling renewed momentum attracting fresh buying from speculators.”Spot gold rose 0.8% to $1,778.17 an ounce by 1:43 p.m. in New York. Prices are up about 2% this week, on course for the biggest gain since Dec. 18. Futures for June delivery on the Comex rose 0.8% to settle at $1,780.20 an ounce.Federal Reserve Chairman Jerome Powell’s reiteration of his dovish stance on monetary policy also helped bullion this week. That helped offset the impact of improving U.S. and Chinese economic reports, which could otherwise diminish demand for the metal as a haven.“The economic data published in the U.S. yesterday afternoon turned out for the most part to be significantly better than the market had anticipated,” Commerzbank AG analyst Daniel Briesemann said. “It seems that market participants believed the U.S. Federal Reserve’s assertion this time that it would not react to good data and would tolerate economic overheating.”In other precious metals, silver and platinum advanced.Palladium rose 1.2% after reaching the highest in more than a year. The metal, which reached a record of $2,883.89 in February last year, has benefited from stricter emissions rules that boost usage in autocatalysts.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • Is This The Most Exciting Commodity Play Of 2021?

    Helium supply is being exhausted and what’s left in the stockpiles may only be used by the federal government, and with demand soaring during the next couple of years, prices are set to rocket

  • Family Offices Targeting 800% Returns With SPAC Economics

    (Bloomberg) -- The Pritzkers built an empire spanning hotels to manufacturing before agreeing two decades ago to split up their fortune among 11 descendants.Karen Pritzker, one of the heirs, has parlayed that wealth into venture capital, backing firms such as Snap Inc. and Spotify Technology. Now she’s joined the wave of investors turning to blank-check firms.The Pritzker Vlock Family Office is the anchor investor for Thimble Point Acquisition Corp., a special purpose acquisition company that raised almost $300 million in an initial public offering in February. Executives from the family office, named after Pritzker and her late husband Michael Vlock, are leading the venture, which will focus on software and technology.“It allows us to be able to take companies public and kind of complete the full life cycle,” said Elon Boms, 40, Thimble Point’s chief executive officer and managing director of the family office, which committed $50 million to the SPAC ahead of its IPO.Growing ForceThe SPAC boom has attracted financiers, former politicians, athletes and celebrities willing to use their fame to attract retail and institutional investment. About 600 blank-check companies have raised more than $182 billion since the beginning of 2020, according to data compiled by Bloomberg.But family offices — the discrete, sometimes secretive firms that manage the affairs of the ultra-rich — have been one of the biggest driving forces.While large family offices have long been investors in private equity and real estate, the recent flurry of SPAC bets show how they’re becoming a growing force in public markets. This comes at a time when some critics are pushing for more regulation of the investment firms following the implosion of Bill Hwang’s Archegos Capital Management, which has inflicted billions of dollars of losses from banks.Family offices are largely exempt from registering with the U.S. Securities and Exchange Commission, but SPACs have to file with the regulator, providing insight into how billionaires are managing their money.Family offices and firms linked to them have launched — or sponsored — at least a dozen SPACs that have raised about $4.5 billion in the past year with a further $1 billion in pending offerings, according to data compiled by Bloomberg.Och, SternlichtFormer hedge-fund manager Dan Och has been particularly active through his Willoughby Capital. The New York-based firm has invested in a blank-check company targeting China’s consumer industry and also holds a stake in Thimble Point, according to a person familiar with the deal. A SPAC he’s sponsored, Ajax I, is merging with U.K.-based used-car platform Cazoo in a deal valued at about $7 billion.Barry Sternlicht’s family office is affiliated with the creation of six SPACs. Meanwhile, a blank-check firm set up by a co-founder of Michael Dell’s family office raised almost $600 million in its IPO last month, while Tom Barrack’s Falcon Peak is sponsoring Falcon Acquisition, a blank-check company that’s filed for a $250 million public offering.Most SPACs have been created in the U.S., but the trend has gone global. Black Spade Capital, the Hong Kong-based family office of casino mogul Lawrence Ho, has got in on the action. London-based billionaire Mohamed Mansour’s Man Capital invested in Grab Holdings Inc., Southeast Asia’s most valuable startup, before it announced a $40 billion tie-up on Tuesday.Rich families are even joining forces. NNS Group the family office of Egypt’s Nassef Sawiris, teamed with an investment firm for the Frere and Desmarais clans to launch Avanti Acquisition Corp., which is targeting European businesses after raising $600 million through its U.S. offering.‘Very Active’“Sophisticated family offices have been very active,” said Luigi Pigorini, head of Europe, Middle East and Africa at Citi Global Wealth. “They have incredible connections, knowledge and investment capabilities — all of these are important characteristics.”The SPAC mania is showing signs of wear and tear with clogged deal pipelines, heightened regulatory scrutiny and concerns over the quality of the deals that have been done.Real estate titan Sternlicht joked that a member of his domestic staff — his “very talented house manager” — probably could pull off a SPAC. He told CNBC last month that “if you can walk, you can do a SPAC,” and pointed out that many of the people behind blank-check firms are failed money managers or executives.“Three days due diligence means you check the letterhead and find out if the company exists,” Sternlicht told CNBC. “It’s a little out of control. No, it’s a lot out of control.”But Sternlicht is convinced he’s got the secret sauce. His Jaws Spitfire Acquisition Corp. is merging with Velo3D, a maker of 3-D metal printers, valuing the company at $1.6 billion. Jaws Acquisition Corp., another SPAC he’s backed, is merging with health-care provider Cano in a deal valued at $4.4 billion.Bolster ReturnsEven if SPACs flounder, it won’t necessarily hurt the family offices that have already launched blank-check companies.SPAC sponsors typically buy shares in firms they create at a fraction of the standard $10 price offered to IPO investors. They usually own about 20% of the blank-check firm’s equity after it goes public and can bolster their returns further through debt or equity financing and stock options.The family office of payments-processing entrepreneur Ed Freedman, for example, is linked to the sponsor of Stable Road Acquisition Corp., which agreed in October to merge with space-transportation company Momentus. The blank-check firm, which has until next month to complete the deal, is seeking shareholder approval to extend the deadline.If they fully vest, a group of shares the sponsor acquired for about $5 million will be worth more than nine times that amount — an 800% gain — even if the company’s stock price remains at $10, according to data compiled by Bloomberg. Freedman’s family office has also loaned the SPAC $300,000 and agreed to invest an additional $3 million at a price of $10 per share, filings show. Stable Road closed Thursday at $10.56 a share.A Stable Road spokesperson declined to comment.SPACs typically have as long as two years to find a company to acquire. If they fail to do so, they have to return cash plus interest to investors, while the sponsor forfeits their original investment.Thimble Point’s Boms said he began considering a SPAC about a year ago after trying to take companies public through reverse mergers. He said he’s had more than 100 meetings with prospective acquisitions since the company’s IPO. Of the roughly 600 SPACs that have listed since the start of last year, less than a third have announced deals and about 30 have completed them, according data compiled by Bloomberg.“We have a very, very solid hit list,” Boms said. “We are talking to people right now.”(Updates with details of Tom Barrack family office in 11th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

  • GM Dropped an EV Battery Bombshell. The Market Hasn’t Noticed.

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  • GameStop Investor Keith Gill Doubles Stake To 200,000 Shares, Worth $31 Million

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