Keeping score: Sukuk pickup, blank-cheque M&A
Highlights from this week’s Thomson Reuters Investment Banking Scorecard:
“Islamic Financing Reaches $10.9 billion
“Malaysia state oil company Petronas lifted the volume of Islamic financing for year-to-date 2009 with a $1.5 billion sukuk offering that was part of a $4.5 billion global financing package via CIMB Securities, Citi and Morgan Stanley. Year-to-date, Islamic financing volume has reached $10.9 billion, a 30% decline from last year at this time when new offerings totaled $15.7 billion.
“Issuers from Malaysia, Saudi Arabia and Pakistan have accounted for over 80% of this year’s Islamic financing activity, while Energy & Power companies have raised just over 40% of the overall proceeds in the market this year.
“Infineon Offering Marks Biggest EMEA Tech Deal
“A $1.0 billion secondary offering from Germany’s Infineon Technologies marked the biggest high technology equity offering in Europe, Middle East and Africa this year, bringing activity in the sector to $2.4 billion, a 52% increase from last year at this time. Excluding financials, EMEA follow-on activity totals $78.5 billion for year-to-date 2009, an increase of 72% over 2008.
“Including financials, secondary offerings in EMEA total $118.3 billion, 3% decrease from the same period a year ago.
SPAC IPOs return
The team behind cash shell company Germany1 is preparing to list its next special purpose acquisition company (SPAC) in October after Thursday’s 532 million euros deal with AEG Power.
A SPAC is a shell company set up by people with a proven track record in making acquisitions. They offer takeover targets a way to become public companies without having to undertake an initial public offering.
In this case, Germany1′s acquisition makes power system firm AEG a public company through a so-called ”back door” listing.
The shell will change its name to AEG Power after the deal completes in mid-August.
Mission achieved, the Germany1 team is now working on its next IPO – another SPAC that is looking to raise about 300 million euros ($426.7 million) in October.
SPACs are most relevent in challenging market conditions — the IPO proceeds they raise are placed into an interest-bearing trust and they don’t borrow money. If they cannot find any acquisition targets that meet the approval of the majority of their shareholders, usually within two years, they will return the IPO money.
Companies seeking listings also prefer going pubic through a SPAC deal in a difficult market as the channel is faster and less vulnerable to market volatility.
SPACs poised for comeback via hockey? Not quite
A blank check company is set acquire the National Hockey League’s Florida Panthers for $240 million, a source has told Reuters, potentially making Sports Properties Acquisition Corp one of the rare companies in the past year to get investor buy-in for a proposed acquisition.
Blank check companies, or special purpose acquisition companies (SPACs) as they are more formally known, raise money in an IPO and then buy a company, making it a public entity. Investors are essentially betting on the talents of a management team without knowing in which company they are ultimately invest.
In Sports Properties’ case, the management team includes former home run champion Hank Aaron and ex-New York Governor Mario Cuomo. Apparently Sports Properties’ A-list management team has convinced investors that a Sunbelt hockey team ranked 24th most valuable among the NHL’s 30 teams by Forbes is the kind of safe bet they have have been clamoring for.
Still even if the deal goes through, that probably doesn’t spell a return of SPACs.
Since a blockbuster 2007, investors have balked at showing blind faith in even the most seasoned managers, with dollar volume by SPAC IPOs falling 70 percent in 2008, and no deals this year. Investors in the past year have voted down one acquisition plan after another, preferring to get their money back rather than invest it in a stock that could prove shaky, even now as things seem to be steadying.
(PHOTO: Reuters/Carlos Barria, Florida Panthers game in Sunrise, FL, April 11, 2009.)
