The real estate industry SPAC craze continues. This time it’s Cushman & Wakefield (NYSE: CWK). The Chicago-based company plans to raise $250 million by offering 25 million units at $10.
What does Cushman & Wakefield have planned?
Background on the sponsor, Cushman & Wakefield
Cushman & Wakefield is a real estate firm that manages commercial properties on behalf of institutional, corporate, and private clients. Founded in 1917, the company did $7.8 billion in revenue in 2020 while overseeing 4.1 billion square feet of commercial real estate worldwide in 60 countries. Besides property management services, the firm also provides facilities and project management, leasing, capital markets, valuation, and other services.
In case you’re new to SPACs
SPACs, otherwise known as “blank-check” companies, are built to raise money to find a private company to help take public through a merger. An investment in a SPAC is an investment in the management team’s ability to find a suitable company to take public in the near future, which is why it’s a “blank-check” company.
SPACs have become a very popular vehicle for taking companies public in the real estate industry. Other notable real estable players involved with SPACs include RXR Realty, Tishman Speyer, CBRE Group (NYSE: CBRE), and Fifth Wall.
All SPACs have sponsors that front the costs needed to fund regulatory and underwriting costs, which usually represent 3% of the IPO amount they’re seeking. The sponsors tend to receive large amounts of cheap warrants in exchange for fronting the SPAC, which means the sponsors are in for a big payday if a SPAC successfully acquires a target company.
Some recent proptech companies that have either been acquired through a SPAC or have announced that they will be acquired include Hippo, a homeowners insurance company, View, a smart glass company, and Matterport, a company that helps take the built world virtual.
What’s planned for this SPAC?
Cushman & Wakefield is naming the SPAC C&W Acquisition. C&W Acquisition will be led by Cushman & Wakefield Executive Chairman and CEO Brett White.
The SPAC’s acquisition target is pretty broad. Nasdaq reported that C&W, “intends to focus on identifying businesses that can benefit from the sponsor’s global footprint, leading brand, operational expertise, client insights, research and data, and procurement scale in the real estate industry, including technologies targeting proptech businesses and real estate adjacent businesses.”
The Millionacres bottom line
With RXR Realty, Tishman Speyer, and CBRE all participating in the SPAC trend, Cushman & Wakefield must have felt left out. Like many of the other SPACs out there, this one’s investment target has a pretty broad scope.
The management team, which is who you would be investing in, clearly has a strong background in the target acquisition area. That being said, there’s a heavy amount of competition on the SPAC front from real estate sponsors.
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