Blank-check IPOs on the rise in first quarter

While the market for initial public offerings of stock has ebbed, financiers raised $3.2 billion in so-called blank-check IPOs in the first quarter, as much as was raised in such offerings in all of 2006 and keeping pace with the pace of 2007.

If a blank-check company is unable to make an acquisition on favorable terms within two years, it must return funds to investors. In reporting the first-quarter figures, Greenwich-based Renaissance Capital indicated investors appear to be favoring such offerings by special-purpose acquisition companies (SPAC), in part due to the limited risk they pose. That can also create an Achilles heel in the words of Renaissance Capital, in that an SPAC sponsor may differ with controlling shareholders on the attractiveness of an acquisition opportunity.

In a separate report issued in early April, Palo Alto, Calif.-based SPAC Research Partners predicted blank-check IPO”™s will drop 10 percent this year, as funds husband their cash and take more care in choosing investments in an uncertain economic climate.

Given its proximity to New York City investment banks and local hedge funds, Fairfield County has been an active breeding ground for SPAC sponsors. In a recent success story, former Nielsen Co. executive Michael Connors used such a structure to raise $255 million last year to acquire outsourcing consulting via a Stamford-based SPAC called Information Services Group

In late March, Goldman Sachs Group Inc. filed plans to raise $350 million via a SPAC called Liberty Lane Acquisition Inc., its first blank-check offering.