Celebrities Support Media, Entertainment, Wellness and Sports PSPCs
More and more celebrities are testing their mettle as entrepreneurs, venture capitalists and angel investors. The stars are also active in a relatively unknown part of the stock market known as Special Purpose Acquisition Shares or SPAC Shares. Some celebrities support PSPC actions, which might not be a good thing.
This list includes many top athletes and singers supporting these investment vehicles, often with managers from Wall Street. Many of these SPACs are trying to acquire private companies in the media sector, Game, sports and other industries.
The celebrity roster includes retired basketball superstar Shaquille O’Neal; the former tennis player n ° 1, Serena williams; basketball player, Stephen Curry; retired New York Yankees baseball player Alex Rodriguez; rapper Jay-Z; singer, Ciara; baseball manager, Billy Beane; former footballer Colin Kaepernick; and others.
PSPC stocks have become more popular due to the recent success of several companies that have gone public through PSPCs. The list includes Richard Branson’s spaceflight company, Virgin Galactic Holdings (SPCE) and online sports betting company DraftKings (DKNG).
The success of some companies has increased the attractiveness of PSPC stocks and investors are flocking to PSPCs. In 2020 alone, more … than 200 PSPC shares went public, raising $ 83.4 billion, up from $ 13.6 billion in 2019. In 2021, nearly $ 80 billion was raised in the quarter alone.
However, just because celebrities invest in PSPC stocks doesn’t mean it’s a good investment for most investors. Indeed, this new trend caught the attention of the SEC, which issue a warning on celebrity involvement in PSPCs.
“Celebrities, like everyone else, may be brought into a risky investment or may be better able to bear the risk of loss. It is never a good idea to invest in a SAVS just because someone celebrates sponsors or invests in it or says it is a good investment…. “
How do SPAC actions work?
What is a PSPC action? PSPC shares are also referred to as blank check companies or shell companies. The main objective of an SPAC is to raise funds to acquire a private company and to go public through a reverse merger. Businesses have no tangible assets.
The advantage of this route is that it is generally less expensive and takes less time than an IPO. The SAVS have two years to finalize a merger; otherwise, they must return the money to the investors.
PSPCs are riskier than traditional IPOs. Some PSPC actions are formed for a specific purpose, but many do not have a clearly defined vesting. Therefore, a significant risk is that you may not necessarily know in advance what type of business you are going to own. Additionally, PSPC shares are subject to fewer regulatory and financial disclosure requirements, which increases the risk compared to IPOs.
Why does PSPC want to work with celebrities?
There are probably several reasons why PSPC actions work with celebrities. First and foremost, stars bring instant recognition and publicity. Second, it can open doors in media, games, and sports. Third, in meetings with investors, it may be easier to raise funds.
Likewise, competition for PSPC stocks is higher now. Finally, having a celebrity on the team or on the board can make it easier to strike a deal with a start-up wishing to go public.
Why do celebrities want to work with PSPCs?
Celebrities are becoming more and more investors, and some have been very successful. They have their first career money and want to put it to good use. The success of PSPC’s previous acquisitions attracts investors with liquidity. Celebrities are also getting more publicity.
Some SPAC actions with the participation of celebrities
Alex Rodriguez is the President and CEO of Slam Corp. The Antara Capital hedge fund supports the PSPC. According to the SEC filing, Slam Corp is seeking to augment $ 575 million in its IPO. Slam Corp will merge with a private company in the sports, media or wellness industry.
The baseball manager made famous in the book and movie MoneyBall; Billy Beane also owns a SPAC. Its SPAC, RedBall Acquisition Corp, is trying to acquire a professional sports team after raising $ 575 million. RedBall recently attempted to take parent company Boston Red Sox to the stock market, but failed.
Apparently RedBall was trying to acquire a 20% to 25% stake in Fenway Sports Group at a valuation of $ 8 billion. Fenway Sports Group also owns Liverpool FC, a NASCAR team and a sports network. RedBall is search now another target of acquisition in professional football or games.
Disruptive Acquisition Corp. is another SPAC with the participation of sports celebrities. PSPC has raised $ 250 million but does not have a clear acquisition target. In filing with the SEC, the company stated that it “… can pursue an initial target activity at any stage of its business development or in any industry or sector; we intend to focus our research on target companies in the health and wellness, entertainment and consumer technology industries.
Many celebrities are involved in Disruptive, including footballer Patrick Mahomes, baseball pitcher Justin Verlander, Naomi Osaka, boxer Canelo Barragan, footballer Robert Lewandowski, former professional tennis players James Blake and Mardy Fish.
Another SPAC with a former athlete on their team is Forest Road Acquisition Corp. Basketball Hall of Famer; Shaquille O’Neal is part of the team. This SPAC is to acquire Beachbody, the virtual fitness streaming company and the Myx Fitness exercise bike company. Shaq is also a strategic advisor with Forest Road Acquisition Corp II, which recently raised $ 305 million in an IPO.
Great tennis player Serene Williams sits on the board of directors of Jaws Spitfire Corp., which Starwood Capital heads. In addition, the PSPC Brings VELO3D, 3D printing company, listed on the stock exchange. The new company could be valued at nearly $ 1.6 billion.
Former football player Colin Kaepernick is the co-chair of Mission Advancement Corp, raising $ 250 million. SPAC to want identify and acquire a business to create significant financial and societal value.
Dune Acquisition Corp, which works with basketball player Stephen Curry, is another SPAC with athlete participation. In addition, PSPC raised $ 150 million to acquire a software as a service (SaaS) company.
PSPC is not limited to athletes. For example, singer Ciara sitting on the board of directors of Bright Lights Acquisition Corp. The company is run by Hollywood insiders Peter Guber, director of Mandalay Entertainment, and Michael Mahan, vice president of Dick Clark Productions and co-owner of several sports teams and Epic Games (maker of Fortnite).
Bright Lights is seeking to raise $ 200 million to acquire companies in the consumer products, media, entertainment and sports industries.
Rapper Jay-Z and his entertainment company ROC Nation are involved in cannabis’s largest SPAC, Subversive Capital Acquisition Corp. He joined the Chief Visionary Office to guide the brand’s strategy. SPAC merged with Caliva and Left Coast Ventures to form a holding company.
Fox Business anchor Larry Kudlow is on the Board of directors of Ross Acquisition Corp II. PSPC is chaired by Wilbur Ross, the former Secretary of Commerce.
PSPCs strive for a star on the board. With so many celebrities investing in SPACs, it can be tempting for ordinary investors to invest. But PSPCs can be risky and investors can lose money. Most small investors are better off with what they know and safe retirement investments.
In a SPAC, you are betting on a stock that does not yet have a product or service and may not have a successful acquisition. If management makes the wrong decisions when acquiring it, investors can lose despite having a celebrity on the team.
Photo credit: Sharon Alagna