Goldman Sachs has shifted two of its most senior equity bankers in London into a new team that will look to capitalise on the expected boom in blank cheque companies in Europe.
Celine Assouline, who has been co-head of structured equity for Europe, the Middle East and Africa for the last seven years, will co-head a new unit alongside Lyle Schwartz, who previously led a division at the US bank raising capital for private companies, according to people familiar with the matter.
The newly-formed unit, called alternative equity products group, will look to capitalise on the expected boom in special purpose acquisition companies in Europe, as well as bring together other parts of its equity capital markets functions including private placements, pre-initial public offering convertibles and equity-linked products.
Spacs have surged in the past 12 months as high-profile bankers and celebrities alike have looked to ride the wave of interest throughout the pandemic. There have been $55bn worth of Spac IPOs globally so far this year (compared to $83bn throughout 2020), almost exclusively in the US, according to data provider Dealogic.
Spacs look to raise money on public markets with an eye on acquiring a private company down the line, usually in a particular sector. Spacs have signed a record $150bn worth of M&A deals so far this year, according to Refinitiv.
The world’s biggest investment banks have made nearly $3bn in fees working on Spac IPOs so far in 2021, according Dealogic, nearly as much as they did for the whole of 2020. Last year, the $3.4bn earned working on Spacs was fivefold more than any other comparable year.
Goldman Sachs is currently second in the revenue league tables for announced Spac IPOs, according to Dealogic, having made $420m in fees. It is second only to Citigroup, which has made $421m.
A number of ECM functions will also sit within Goldman’s new alternative equity products unit, including regional origination of deals — which includes UK corporate broking —corporate equity derivatives and equity syndicate.
Despite the Spac boom being largely confined to the US, bankers in Europe are bracing for the trend to come across the pond. In February, former UniCredit chief executive Jean Pierre Mustier teamed up with LVMH founder, Bernard Arnault, to launch a special purpose acquisition vehicle focused on financial services firms listed in Amsterdam, while German tech investor Klaus Hommels launched a €275m Spac in Frankfurt through his venture capital firm Lakestar, which will look at snapping a late-stage European tech company worth between €750m and €4bn.
Goldman Sachs chief executive, David Solomon, said on 19 January that the boom in Spac IPOs was “not sustainable in the medium term” and that the bank would be more selective by picking the “best situations”.
Investment banks in Europe have started to reorganise their teams to react to an expected boom in both Spac IPOs and M&A activity as these companies look for acquisition targets.
JPMorgan promoted Guillermo Baygual, co-head of M&A for Europe, the Middle East and Africa and Lukasz Dziarnowski, a senior M&A banker focused on Central and Eastern Europe into its newly-created European specialist Spac team in February.
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