Private equity industry veteran Rohan Ajila and Manipal Group Chairman Gautham Pai announced the launch of a special purpose acquisition company (SPAC) for acquiring companies in the consumer sector.
A SPAC is a development stage company, also known as a blank-check firm, with a business plan centred around a merger or acquisition with another company, before going public.
The SPAC called Global Consumer Acquisition Corp (GCAC) raised $ 170 Mn in an initial public offering this week. The company, listed on NASDAQ under the symbol “GACQU”, aims to combine with a number of consumer businesses with strong growth potential that complements the management team’s extensive investment and cross border operator experience, according to its IPO prospectus.
GCAC is aiming to acquire targets with enterprise value in the range of $ 500Mn – $1Bn complemented by a series of tuck-in acquisitions in similar or adjacent categories to further accelerate the growth of this platform.
“We intend to focus on global consumer companies with a significant Asia presence or a compelling Asia potential, especially India,” said Rohan Ajila, cochairman and CEO of GCAC. “This complements the expertise of our management team in cross border M&A, business development and Asia/India expansion.”
The company declined to specify which companies they are in discussions with. “The SPAC aims to get a deal done in the next 12 months,” Ajila said. SPACs have about two years to identify and complete acquisitions before the blank cheque company is dissolved.
The GCAC team believes that the consumer industry provides a number of interesting acquisition opportunities that it can tap into through its global private equity and operator network. “Today every company is rethinking their business in terms of technology, supply chain and markets and this provides us specific opportunities” said Ajila.
Ajila is a private equity veteran with over 20 years of experience in investment management. He is a managing partner at FIDES Business Partner, a private equity firm based in Zurich and was also the managing partner of Capvent AG, a private equity and Fund of Funds investment house which has invested more than $1 Bn globally over the last two decades. The SPAC management also consists of consumer industry and PE veterans Tom Clausen, Art Drogue and Denis Tse.
“While we may look at additional SPACs in the future, our current focus is solely on making Global Consumer Acquisition Corp a success,” said Ajila.
In March, Indian venture capital investors Ravi Adusumalli, the founder and managing partner of VC firm Elevation Capital, and Shashin Shah, founder of Think Investments, partnered to launch a special purpose acquisition company (SPAC) for investments in Indian tech startups looking to list in the US in the near future.
Earlier today, it was reported that India’s securities and market regulator the Securities and Exchanges Board of India (SEBI) plans to build a dedicated framework on SPACs to allow such blank check companies to also raise funds in initial share sales and list locally. Currently, SEBI allows listing of only operational companies with reported financials.
At least one of the recommendations of the SPAC-focussed committee is to ‘limit’ retail participation to protect small investors, said another person aware of the line of thinking at SEBI. SPACs would largely target bulge-bracket foreign investors that want a piece of some unlisted companies, such as Indian unicorns, which may get listed abroad in the future. Indian startups such as Flipkart and Grofers were said to be considering a public listing in the US through SPACs.
SPACs have been around for decades, but the pandemic-driven economic downturn and uncertainties have rekindled people’s interest in stock markets and IPOs thanks to the guaranteed returns on investments offered by the process.