The founder of GAMCO Investors Inc. has filed to raise $400 million in two initial public offerings of stock, with plans to use the proceeds to acquire other companies.
Such blank-check IPO filings have become rarer this year, as investors have taken cover following the collapse of the credit markets.
Under blank-check IPO rules, special-purpose acquisition companies (SPAC) have two years to acquire an operating company or return proceeds to their investors. According to Greenwich-based Renaissance Capital, in some cases stakeholders in SPACs have voted against acquisition deals reached by managers, preferring the certainty of a return check plus interest rather than risk their capital on a merger.
In the second quarter, just one SPAC held an IPO after nine offerings in the first quarter, according to Renaissance Capital, which maintains the IPOhome.com Web site tracking SPAC activity. Several SPACs returned cash to investors, including Liberty Lane Acquisition, which was backed by Goldman Sachs Group Inc.
In July, Westport-based China Holdings Acquisition Corp. struck a deal to purchase Bright World Precision Machinery Ltd., a metal-stamping company based in Danyang City, China, in a deal worth $400 million including the assumption of debt. China Holdings had held its IPO in November 2007.
Mario Gabelli, principal of Rye-based GAMCO, plans to raise $200 million for an acquisition through Gabelli Entertainment and Telecommunications Corp., which will also pursue buyouts in financial services. A second Gabelli company called Greenwich PMV Acquisition Corp. likewise would have $200 million to spend on a buyout in any industry save those covered by Gabelli Entertainment and Telecommunications.
Both funds are based in Greenwich.
GAMCO had a $14.5 million profit in the second quarter on revenue of $65 million, a 4 percent drop. The company has $28.3 billion in assets under management, with its investments including Cablevision Systems Corp. of Bethpage, N.Y.
Gabelli reportedly has been meeting with Cablevision management this month to tout a spinout of a Cablevision unit, possibly its Rainbow Media Holdings L.L.C. unit that owns the AMC, WE and Sundance Channel networks.
