(Bloomberg) -- Alec Gores, the private equity investor who bought a majority stake in Hostess Brands LLC earlier this year, is preparing for his next big deal.
Gores Group incorporated its second blank check company in August, according to Delaware state records. The new buyout venture will probably seek to raise about $400 million, Mark Stone, a senior managing director of the Beverly Hills, California-based firm, said in a telephone interview.
These companies are “a great alternative way of taking a company public,” Stone said. “Public markets are limited in what you can raise in an IPO.”
Gores will be competing in a challenging market for raising money from public market investors. This year, $2.4 billion has been raised for blank-check companies, down from $3.4 billion in the same period year earlier, according to data compiled by Bloomberg.
Blank check, or special purpose acquisition companies, sell stock to investors through a public offering and then have two years to find a business to acquire. After finding a suitable target, the firm buys the company and takes it public through a so-called reverse IPO.
Therakos Sale
Gores Holdings raised a total of $725 million to buy the Hostess stake from Dean Metropoulos and Apollo Global Management LLC, the buyout firm co-founded by Leon Black. Apollo and Metropoulos considered selling shares in the Twinkies maker through a traditional IPO, only to opt for a more certain payout through the Gores transaction.
Alec Gores, 63, the parent company's chairman and CEO, got his start in private equity after founding and selling a software company to Contel in 1986. Last year, Gores Group sold Therakos Inc., an immunotherapy developer, for $1.33 billion to pharmaceuticals company Mallinckrodt Plc.
Gores Holdings II Inc., the new blank check company, won't target any particular industry, Stone said, noting that the firm is a generalist when seeking transactions. In 2011, the firm unsuccessfully bid to acquire Warner Music Group Corp. and also expressed interest in buying bookstores from the bankrupt Borders Group Inc.
“Our focus is on getting the first deal closed,” said Stone, referring to Hostess. “On the heels of that, I do anticipate we will raise another” blank check company.
--With assistance from Alex Barinka To contact the reporter on this story: Miles Weiss in Washington at mweiss@bloomberg.net. To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella, Josh Friedman
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
