Beverly Hills private equity firm Gores Group has raised several private funds, tapping into well-heeled investors and institutional money. But its latest move is open to the public.
On Aug. 19, Gores Holdings Inc., an entity controlled by the firm, announced that it had completed a $375 million initial public offering. Its stock trades on the Nasdaq under ticker symbol “GRSHU.”
Gores Holdings sold 37.5 million units at $10 apiece, with each unit entitling the holder to one share of Gores Holdings common stock and one warrant to buy a half-share at $5.75. The proceeds will go toward making an acquisition – one that hasn’t been identified yet. If the company cannot complete a deal within 24 months of the offering, it will redeem all of the shares in cash, plus interest.
While this type of company, called a “blank check,” is a first for Gores Group, it’s hardly a new tool for local investors.
In 2013, veteran L.A. entertainment executives Harry Sloan and Jeff Sagansky formed Silver Eagle Acquisition Corp., which completed its purchase of Indian pay-TV operator Videocon d2h on March 31.
One advantage of the blank-check
structure is that it allows a company to raise money for a future acquisition while giving investors easily tradable stock while they wait. A source close to Gores said the structure also provided an opportunity to dedicate a pool of capital to pursue acquisitions that might be too small to fit into the private funds the firm typically raises, which can reach $10 billion.
The blank-check company might also be used to buy a company Gores intends to hold for a long time, as opposed to the seven-year harvesting cycle common to private equity.
But critics, such as Bloomberg’s Matt Levine, argue blank checks can be used to give private companies a way to go public while avoiding the scrutiny that comes with a typical public offering.
A Gores Group spokesman declined to comment on the IPO.
New York accounting firm Marcum has named Arthur Brown a partner in its L.A. office. Brown, who was formerly chief financial officer at a hedge fund, will lead the firm’s alternative industry group practice in California. … Mid-Wilshire’s Broadway Financial Corp. has named Erin Selleck to its board. She was formerly a senior executive vice president and treasurer at Union Bank.
Staff reporter Matt Pressberg can be reached at email@example.com or (323) 549-5225, ext. 230.
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