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Klaus Hommels: Lakestar Spac wants to take over travel startup Hometogo

2021-06-04T13:25:54.589Z

The investor Klaus Hommels has found a takeover target for his recently listed financial vehicle (Spac). The stock exchange coat Lakestar wants to take over the German marketplace for vacation rentals HomeToGo and thus bring it to the stock exchange.



Enlarge image

Longing for the sea: It is

not only in Germany that vacation rentals are hard to come by this summer given the enormous demand.

The German accommodation broker Hometogo is competing with the US giant Airbnb - and is now aiming for the stock exchange via Spac

Photo: Guenter Nowack / imago images / penofoto

Both companies had signed a corresponding letter of intent, it said on Friday in a message from Lakestar and Hometogo.

However, a final binding agreement is not guaranteed.

The transaction amount in the room was also initially unclear.

The German Airbnb competitor HomeToGo lists tens of thousands of providers and is active in 23 countries.

The company was founded in 2014 and has more than 250 employees.

In the first few minutes after the announcement, the price of Lakestar shares rose by up to eight percent.

Shortly thereafter, the shares gave up part of the profits and most recently rose by around three percent to 10.24 euros.

In February, the Lakestar-Spac was the first empty company shell ("Special Purpose Acquisition Company", SPAC) to hit the floor in Frankfurt for more than a decade. In the meantime, the logistics start-up Sennder was also traded as a candidate to make the leap to the stock exchange via the vehicle.

Lakestar has already invested in Hometogo in the past, which is said to have raised more than $ 170 million from donors. In addition to Klaus Hommels, other prominent investors are also involved in the Spac boom: Former Deutsche Bank board member

Stefan Krause

(58), ex-Unicredit boss

Jean Pierre Mustier

(60), Rocket Internet manager

Oliver Samwer

(48), the German investor

Christian Angermayer

(42), ex-Siemens boss

Klaus Kleinfeld

(63) and many prominent economic giants rely on the concept of bringing young companies to the stock exchange with the help of initially empty listed company shells.

In the USA in particular, business had exploded in the past few months, but there are also initial deals or at least plans for them in Europe and Germany.

While the research company Refinitiv counted 43 Spac deals worldwide in the first two quarters of 2020, there were already 83 in the third quarter alone. In total, according to the US broadcaster CNBC citing figures from Renaissance Capital, there were more than 200 Spac deals in 2020 pulled through with a total volume of 64 billion dollars.

Last year and this year together, the US bank Goldman Sachs believes a market volume of up to 300 billion dollars is possible - the Spac market has long been on a par with the conventional business with IPOs.

What are spacs?

The term Spac stands for "Special Purpose Acquisition Company", which in German means something like: A company that was started specifically to take over one or more others. That means: Spacs are initially empty company shells that are founded and listed on the stock exchange. The shares in these companies are usually placed at manageable amounts such as ten dollars each. The capital of $ 200 to $ 600 or even $ 800 million collected in this way is then available to the Spac management - the so-called sponsors - to search for a company that they can acquire and transfer to the Spac cloak can. Seen in this way, the way via a SPAC represents an alternative to the classic IPO.

As a rule, the company to be searched for is characterized more precisely in advance, i.e. the search field is narrowed down.

For example, the former Unicredit boss Mustier announced that he wanted to bring a European financial company to the Amsterdam Stock Exchange via Spac.

Ex-German banker Krause has apparently specialized in electric car start-ups.

And investor Angermayer wants to focus his search for Spac on the biotech sector.

However, the Spac managers cannot take their time with their graduation.

Usually the deadline within which a takeover must take place is a maximum of two years.

If the company is not successfully acquired during this time, the investors get their money back.

Even investors who are not satisfied with the selected takeover property can request their money back before the merger is concluded.

What are the advantages of Spacs?

Spacs serve as a means of raising capital for companies that want to open up to the financial market. However, they require significantly less work and time than conventional IPOs: for example, extensive road shows, at which investors have to be convinced, do not take place in the Spac cosmos. As a result, these transactions are usually also associated with lower costs.

Spacs can also have advantages for investors. For example, broader communication than with a conventional IPO, because the companies that are ultimately taken over into the corporate shell are allowed to disclose more information than can be found in prospectuses for IPOs due to different regulations. However, recent experience has shown that the information provided by companies that are taken over by Spacs should sometimes be viewed with caution. Nikola and Canoo in particular have come under fire from two companies that had promised investors a great future as manufacturers of electric cars. In both cases, information on the status of business and existing partnerships with other companies subsequently turned out to be invalid, which caused the share prices to collapse significantly.

Spac investors can, however, prevent such failures - at least theoretically: If you do not agree to a takeover after careful research, you return your Spac shares beforehand and get the purchase price reimbursed.

What does the success of the Spacs depend on?

The success of a Spac transaction and thus the return that is ultimately in it for the investors stands or falls with the management, which is at the head of the Spac team, i.e. with the sponsors.

Expertise is required there, as well as experience and good networking in the target market.

The choice of the fields of activity of banker Mustier (financial company) or investor Angermayer (biotech, where he already has a lot of experience) is no accident.

The same applies to various prominent figures in the US:

Billionaire

Alec Gores

(68) wants to bring a 3D printer company to the stock market through his Spac, and ex-Citigroup manager

Michael Klein

is already working on his seventh Spac for which he wants to raise a billion dollars. Famous investors such as hedge fund bosses

Bill Ackman

(54) and

Dan Loeb

(59) or social capital boss

Chamath Palihapitiya

(44) have also raised billions.

These are the names that investors should be focusing on.

Because at best there is an industry-specific or regional limitation about the company to be acquired at the time of the Spac issue, the management is the only thing on which an investor can base his decision.

He shouldn't forget how manager remuneration is regulated.

Because it shows the motivation with which they go to work.

What are the risks and disadvantages?

Like every exuberant upswing in the capital investment market, the Spac boom carries a risk: the risk of exaggerations and setbacks. Investors shouldn't forget that for the many billions of dollars flowing into the Spacs, there must be enough attractive investment targets. That means: aspiring, growing companies that can ideally be acquired for less than their real value. Can this really work in every single Spac case? Or isn't the sheer volume of investment funds threatening to distort the market and drive prices up?

There are already negative examples of unsuccessful Spac deals in retrospect.

A prominent one is the electric truck builder Nikola.

After the company

debuted on the stock market in 2020

with its glamorous boss

Trevor Milton,

38, shares initially skyrocketed.

But then there were allegations of fraud and short-seller attacks.

Eventually General Motors withdrew from a proposed stake - and the share price lost ground.

The habit that Spac sponsors usually receive 20 percent of the shares free of charge can also appear questionable.

Because of this construction, deals can also pay off for the managers, which appear rather unattractive for the other investors, say critics.

Investors should also think about this before entering into a spac offer.

cr

Source: spiegel

All news articles on 2021-06-04

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