To be sure, Ackman has hedged this bet. He is a hedge fund manager after all. To act as the lead underwriters of the SPAC, he chose Citigroup, Jefferies, and UBS. They are all part of the established Wall Street club and will walk off with roughly 80% of the total fee pool capped at $86 million, regardless of how much capital is raised. (This is also an Ackman innovation—capping fees!) But the smaller firms, with names like CastleOak Securities, Loop Capital Markets, Ramirez & Co., and Siebert Williams Shank—that rarely get much true love on Wall Street—will get to share $18 million in fees. CastleOak, for instance, was founded in 2006 by David Jones, Nathaniel Christian, and Philip Ippolito, who had all worked together at Blaylock & Company, another minority-owned investment bank. CastleOak has around 50 professionals and is 100% employee owned. CastleOak has had a role in the $105 billion Facebook IPO, GM’s post-bankruptcy $15 billion IPO, and a $10 billion bond issue for Apple. Its first deal out of the gate was as a sole co-manager on a $300 million bond issue for GE. (Reached by email on July 4, Jones appropriately declined to comment, until the offering is completed, about what his firm’s role in the Ackman SPAC means for CastleOak.)
But Ray McGuire, a vice chairman at Citigroup (the lead underwriter on the deal) and one of the most senior Black bankers on Wall Street, told the Economic Club of New York on June 23 about Ackman’s SPAC, “There was a landmark transaction that was announced yesterday. Bill Ackman is going to access the public markets with an extraordinary SPAC. What’s extraordinary about it, in addition to the structure, is that he had the courage and conviction to include minority firms as co-managers with 20% of the fees. Other issuers have allocated 20 basis points to each firm, which is ‘feel-good, check-the-box’ but is certainly not material.” Ackman also decided that two of the four independent directors of Tontine should be women—Lisa Gersh, former CEO of Alexander Wang, the fashion company, a cofounder of Oxygen Media, among other accomplishments, and Jacqueline Reses, the head of Square Capital, a subsidiary of Square, Inc. that provides financing to small businesses and a former M&A banker at Goldman Sachs. The other two independent director nominees, no surprise, are wily older white men: the infamous Michael Ovitz and Ackman’s longtime friend and mentor Joseph Steinberg, the chairman of Jefferies.
If all goes according to Ackman’s plan, he will soon have a huge new unrestricted pool of some $5 billion in equity capital, or more, to make a huge acquisition, plus the publicly traded stock of the SPAC to use as acquisition currency. The prospectus provides a little window into Ackman’s thinking about what he may buy. “We intend to pursue merger opportunities with private, large capitalization, high-quality, growth companies where our ownership in the merged company would generally represent a minority of shares outstanding at the time of the merger,” Ackman wrote. (He declined to comment.)
That gets one thinking. What are a few large, privately held companies where the current owner or owners may be looking for an elegant and quick exit strategy and that are so valuable that even after Ackman buys his stake, it will still be a minority position, albeit a large one? There are names like Koch Industries, the private Midwest industrial giant owned by the aging Koch family. There is the closely held Airbnb, which has also discussed going public but has had a rough go of things during the COVID-19 pandemic. Then, of course, there is Bloomberg L.P., the huge Wall Street data and media empire owned by the multibillionaire former mayor of New York City Mike Bloomberg. By doing a deal with Ackman, Bloomberg, who has signed the Giving Pledge—meaning he plans to give away nearly all of his wealth—would have the liquid stock of a public company that would help facilitate his extraordinary philanthropic commitment. Kind of a win, win. Good for Bloomberg and good for the recipients of his gifts, who will then have any easy way to sell the stock for cash in the market.
Not saying Ackman has his sights on Bloomberg L.P. or not that Mike Bloomberg would ever consider such a deal. But it may be the perfect deal for Ackman, the man who wants to be the greatest investor of his generation and isn’t afraid to do big things.
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