Trump Administration Fellows Wilbur Ross And Larry Kudlow Join Up To Launch SPAC
Ross Acquisition II was founded in 2021 and plans to list on the NYSE under the symbol ROSS.U. BofA Securities is the sole bookrunner on the deal. The SPAC’s sponsor has agreed to invest $8 million to $8.9 million in a private placement to purchase 5.3 million warrants (or 5.9 million if underwriters exercise all overallotments) at $1.50 each. The warrants will grant the right to buy Class A ordinary shares in future for $11.50 apiece.
The Palm Beach, FL-based company plans to raise $300 million by offering 30 million units at $10. Each unit will consist of one share of common stock and one-third of a warrant, exercisable at $11.50. At the proposed deal size, Ross Acquisition II will command a market value of $375 million. The money will fund acquisitions in the auto, energy or other sectors that Ross sees undergoing disruption from the “fourth industrial revolution.”
The company is led by CEO and Chairman Wilbur Ross (served as Secretary of Commerce under the Trump Administration), CFO Stephen Toy (founder at PE firm BroadPeak Global), Head of M&A Nadim Qureshi (founder at PE firm BroadPeak Global), and Director Larry Kudlow joins the board (Director of the National Economic Council under the Trump Administration).
“Over the course of his career, Mr. Ross and his team have invested in approximately 180 portfolio companies across four continents, deploying approximately $12 billion of invested capital,” management wrote in the S-1. Executives wrote that the SPAC will “leverage the prior relationships of WL Ross to identify and complete an initial business combination.”
“The confluence of virtually all sectors of the global economy with new technologies and processes is fundamentally changing the way people live, work and communicate with each other,” Ross and his colleagues wrote in a U.S. Securities and Exchange Commission S-1 filing for Ross Acquisition Corp. II
The executives wrote that “while we may pursue an acquisition opportunity in any business industry or sector,” they expect to focus on “sectors that we believe are currently undergoing transformation, have attractive growth-oriented characteristics and will benefit from the next industrial revolution.” Those include autos, energy, manufacturing, material, semiconductors, space and transportation.
Ross has raised money in a SPAC before (WL Ross Holding, raised $435 million in June 2014 and completed its acquisition of Nexeo Solutions in June 2016). Nexeo was later sold to Univar for $1.1 billion in September 2018.
They are also not the first from the Trump Administration to hop into the SPAC market. Former Trump economic adviser Gary Cohn (headed the White House National Economic Council from 2017 to 2018) recently joined investor Clifton Robbins to raise $720 million for a SPAC named Cohn Robbins Holdings on the NYSE - symbol CRHCU.
And former U.S. House Speaker Paul Ryan, a one-time Wisconsin congressman and the Republican Party’s 2012 vice presidential nominee, worked with Vivint Solar co-founder Alex Dunn to generate some $360 million for Executive Network Partnering Corp. on the NYSE - symbol ENPC (ENPC priced at $25 per investing unit (one share plus 0.25 warrants for a second share).
Are these legit investments set to bring real returns or just politicians trying to play in a new market with practically no barriers? Only the future will tell.