Pioneer SPAC Seeks to Fill Gap Left by Cash-Strapped PE

Finland’s first blank-check company says it plays a unique role in providing especially fast access to capital, given the limited resources private-equity investors have in the Nordic nation.

Virala Acquisition Company Oyj last month raised 107.5 million euros ($127 million) from investors in an initial public offering in Helsinki, and now has as long as three years to find a mid-cap company to buy. VAC, as the company calls itself, intends to give its target a quick way to fund growth as a public company and avoid having to sell to an industrial buyer, typically foreign, for lack of other options.

Pioneer SPAC Seeks to Fill Gap Left by Cash-Strapped PE

“If you want to remain in Finland, headquartered in Finland, and have a stock listing in Finland, the alternative hasn’t been there,” said Johannes Schulman, chief executive officer of the special-purpose acquisition company. “Domestic private-equity players don’t have big enough firepower for this kind of transaction.”

VAC is looking for a target valued at as much as 500 million euros with strong ties to Finland, and will finance the acquisition with its own shares. The bulk of the funds raised now from investors will be spent on developing the acquired company. VAC says it’s willing to settle for a minority stake, if that’s what it takes to make an agreement with a target. That flexibility gives it a competitive advantage over other potential buyers.

According to recent data from the Finnish Venture Capital Association, about half of investments into Finnish growth companies come from foreign buyout investors. Last year, domestic buyout firms invested just 329 million euros in a total of 68 companies.

The SPAC wave, already cresting in the U.S. after a couple of years of high activity levels, hit the Nordics this spring, with a number of listings after Nasdaq Inc.’s exchanges in the region settled on local rules for the entities.

Even so, investor appetite for the offerings has varied. While the first Scandinavian SPAC, ACQ Bure AB, still trades just above its IPO price, two others in Sweden have lost value since listing and a fourth is little changed. No SPACs have listed in Copenhagen yet. In Oslo, Viking Venture plans to list Viking ACQ 1 as soon as possible.

In U.S. SPAC listings, famous sponsors often get a sweeter deal than other investors. In contrast, the Finnish SPAC’s biggest owner Virala Oy, with about 40% of shares and votes, says the deal is structured in way that gives it meaningful upside only when value is created for all shareholders. The family-owned firm invested 35 million euros in VAC as part of the IPO.

“We’re not focusing just on the de-SPAC event, we’re focusing on finding a good company that we can help grow profitably, and we want to stay as owners for as long as we are beneficial to that company,” said Chief Executive Officer Alexander Ehrnrooth. “The ultimate success for us is that people see SPACs constructed as our VAC actually complement the market.”

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