Philip Falcone isn't acting like a man whose career as a hedge fund manager is in serious jeopardy.
The Harbinger Capital Management founder yesterday announced plans to acquire a blank-check company in Australia and list it on the Nasdaq Stock Market as his second permanent capital vehicle. Harbinger will trade its majority interest in a company that develops hotels and resorts in Vietnam and a minority stake in Brazilian iron ore producer Ferrous Resources for a majority stake in the Australia Acquisition Corp., a two-year-old special purpose acquisition company.
AAC will be renamed Harbinger Global Corp. after the deal closes next month. Harbinger's stake in the company will be between 83% and 96%, depending on how many of AAC's shareholders decide to stick with Falcone and how many demand their money back.
AAC raised US$64 million in 2010; the Asian Coast Development and Ferrous stakes are valued at US$350 million.
"This transaction marks an important milestone for us in forming a new permanent capital vehicle focused on emerging markets," Falcone said. "We continue to see opportunities to enhance value for Asian Coast Development in the fast-growing Far East hotel and gaming industry and Ferrous Resources, as it moves to increase organic iron ore production in Brazil. Additionally, we see this platform as providing investors in our funds with enhanced liquidity"—which has been sorely lacking in recent years—"and opportunities for diversity and meaningful capital appreciation."
Harbinger created its first permanent capital vehicle, called Harbinger Group, two years ago. But Harbinger Global comes amidst dicey times for the hedge fund, which has seen its assets dwindle as its largest investment, wireless Internet company LightSquared, faces extinction at the hands of federal regulators. To make matters worse, Falcone and Harbinger were sued last month for fraud; the Securities and Exchange Commission alleges three separate matters of wrongdoing.
Falcone, who will serve as executive chairman of Harbinger Global, denies any wrongdoing.
Australian banker Peter Ziegler, who created AAC, will serve as Harbinger Global's CEO.