Private equity firm Warburg Pincus is looking to raise up to $750 million for two blank- cheque firms that could merge with businesses with near-term potential to bring in strong free cash flow, according to regulatory filings on Wednesday.
The blank-cheque firms, Warburg Pincus Capital Corporation I—A and Warburg Pincus Capital Corporation I—B, said they are aiming to raise up to $250 million and $500 million respectively.
SPACs (special purpose acquisition companies) are shell companies that go public, typically at $10 a share, through an initial public offering and use the proceeds to buy a private firm, usually within two years. The private firm then becomes publicly traded as a result.
The alternative route to going public, which gained popularity in 2020, has not lost steam in 2021. Online lending startup Social Finance (SoFi), billionaire Tilman Fertitta's hotel company Fertitta Entertainment and Blackstone's benefits services provider have all announced mergers with SPACs so far this year.
SPACs raised $24.26 billion in January, 20 times more than the same period in 2020, Refinitiv data showed. Last month's haul was already 30% of the total $79 billion raised by SPACs in the whole of 2020.
Earlier this month, a SPAC backed by private equity firm KKR & Co also filed for an IPO of up to $1 billion.
Warburg Pincus Capital Corporation I—A and Warburg Pincus Capital Corporation I—B will list on the New York Stock Exchange under the symbols 'WPCA.U' and 'WPCB.U' respectively.
Citigroup, Credit Suisse and Evercore ISI are the underwriters for both the offerings.