WL Ross Holding, ‘blank check’ firm, rises in debut

The company raised $435 million after selling 43.5 million units for $10 per unit. Each unit comprises one share and one warrant to buy half a share. The company’s units were up about 2 percent at $10.19 in afternoon trading on June 6 on the Nasdaq, sister news service Reuters reported.

This was the third IPO this year of a so-called “blank check” company, which is set up for an eventual merger or other business tie-up. Last year, 10 blank check companies raised $1.44 billion, the highest amount since 2008, according to industry data website SPAC Analytics.

WL Ross Holding said in its prospectus that it was yet to initiate “substantive discussions” with potential business targets. Under SEC regulations, blank-check companies have 18 months to identify a takeover target, with an extension of up to six months available to close a deal.

The firms, also known as special purpose acquisition companies (SPAC), need the consent of 80 percent of their investors to make an acquisition. If they fail to complete a deal, SPACs are required to return the money they’ve raised to investors, minus fees and expenses that can range from 8 percent to 15 percent of the total.

Data from SPAC Analytics show that about 35 percent of the SPACs set up since 2003 have liquidated without finding a buyout target, while shares of those that completed a buyout produced an average annualized return of negative 13.4 percent. Nonetheless, investors plowed $2.7 billion into SPACs globally last year, up from $327 million in 2012, according to Thomson Reuters data.

Ross, 76, made a name for himself as a bankruptcy specialist, snapping up out-of-favor assets ranging from banks to textile firms. He recently stepped down as chief executive of his private equity firm, WL Ross & Co, which manages around $10 billion in assets.

Talmer Bancorp Inc is the only other company to have been taken public by Ross this year. Ross also has a large stake in Diamond S Shipping Group Inc, which dropped its IPO plans in March, citing lower suggested price. Ross’s stake in WL Ross Holding has been diluted to about 20 percent after the offering, proceeds of which will be used to fund acquisitions.

Deutsche Bank Securities and BofA Merrill Lynch were the lead underwriters for the offering, WL Ross said in a statement.

Amrutha Gayathri and Avik Das are correspondents for Reuters in Bangalore.