SPAC Formed By Blackstone's Chu Files To Raise Up To $1.1B

Apr 22 2016 | 9:44pm ET

The special-purpose acquisition company formed by former Blackstone executive Chinh Chu and Fidelity National Financial chairman William Foley has filed a prospectus detailing plans to raise up to $1.1 billion.

The new venture, named CF Corp., will ultimately have up to $1.1 billion in buyout funds that will purchase one or more companies in the financial, technology or services sectors. Chu and Foley are putting $69 million of their own capital into the venture, according to the filing, and the remainder will reportedly come from a $500 million private placement from Blackstone and other institutional investors.

Special purpose acquisition vehicles, or SPACs, are sometimes described as “blank-check” companies because they raise capital in public offerings that is then used (often with leverage) to buy specific companies, assets, securities or form joint ventures. Typically, if a SPAC fails to find a suitable outlet for the capital it has raised within a certain period of time (i.e. two years), the capital is returned to investors. Very popular before the financial crisis, SPACs came under severe pressure during the crash as performance waned and scandals involving SPACs came to light.

According to the prospectus, CF will have up to two years following the IPO to do a deal. As expected, CF is more of a permanent capital vehicle than a traditional SPAC, with many investors agreeing to liquidity lockups even if they disapprove of CF’s ultimate acquisition targets. 

Chu was with Blackstone for 25 years and became of one of its top dealmakers, leading some of the company’s most successful deals and spearheading the alternative investment manager’s attempt to acquire Dell. 

If successful, the CF IPO would be the largest by a SPAC since 2008. 

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