Last week, North Atlantic Acquisition Corporation (NAAC) became just another statistic of the financial graveyard.
In filings at the Securities and Exchange Commission in New York, its obituary gave little away about its sudden death.
“The company intends to dissolve and liquidate,” it noted. It might as well have said it followed a short illness.
Like so many of its peers, the Irish-backed special purpose acquisition company (Spac) – which had tapped investors for close to $400m in January 2021 – was on borrowed time.
Spac genetics had weakened considerably since a wave of such blank-cheque investment vehicles hit the markets between 2020 and 2021. About 800 of them had raised hundreds of billions of dollars.
They provided hopes of returns for investors struggling to find them in a low interest rate environment. But one by one, speculative Spacs began to expire before ever cementing deals.
Bloomberg reported last month that within the space of just one hour in December, planned Spac deals worth almost $11bn evaporated. Rising interest rates and new rules in the US conspired to throttle the Spac craze.
But a deluge of Spac money is still scouting for merger targets that would, via a reverse merger with the listed investment vehicle, secure a public listing themselves. In the first four months of this year, Spacs with as much as $74bn in their bank accounts have to find targets or face liquidating.
NAAC was co-founded by its CEO, financier Gary Quin (52). The Cork native’s early career trajectory was moulded in the orbit of billionaire Denis O’Brien. When he turned 31, Mr Quin secured a job with Connolly Capital, the boutique finance house established by Mr O’Brien’s close business associate, Paul Connolly.
While there, Mr Quin was involved in various financial roles at Mr O’Brien’s Digicel telecoms firm in the Caribbean and in European business deals for the billionaire. He later went to be a vice-chairman at Credit Suisse.
Another key co-founder, or sponsor, of NAAC was Irish businessman Patrick Doran. He sold his Dublin-based packaging firm Americk in 2016 to Spanish group Saica. He then established Woodberry Capital, a private investment firm.
Perched on the top of the Spac wave, they secured the $400m in funds from backers, listed on the Nasdaq, and set about sealing a deal. They had two years to do it. Its investors included hedge funds and asset managers from both sides of the Atlantic.
A keen rower in his youth, Mr Quin was the kind of seasoned executive NAAC’s investors wanted in their corner. He would pursue a deal with the zeal demanded when the sand was flowing through the hourglass. And despite the volume of Spac cash chasing a home, Mr Quin zeroed in on a merger candidate. Everything was going according to plan.
Last year, NAAC planned to merge with US-based tech business TeleSign, which is owned by Belgian mobile phone company Proximus.
That deal valued TeleSign at more than $1.7bn including cash from NAAC. NAAC shareholders would have owned 22pc of the merged entity, while 4.9pc would have been split between NAAC’s founders. Mr Quin and Mr Doran stumped up just $25,000 for their founding shares and controlled 20pc of the total outstanding shares in NAAC. It would have made for a spectacular return. But within weeks it had unravelled, leaving NAAC on the march again, looking for a conquest.
But time – that most valuable of commodities – was running out.
Nothing new appeared to be on the horizon and with the sand vanishing, NAAC wanted to ask shareholders for an extra six months to spend their money. The original deadline had been the end of January this year. NAAC’s co-founders even said they’d stump up millions in extra cash to help fund NAAC if they got the extension. They’d already spent a small fortune bankrolling it.
But last week, just hours before a shareholder meeting where investors would be asked for that extra time, NAAC announced it would liquidate and return investors’ money. It must have been a hugely frustrating outcome for Mr Quin and Mr Doran, who having brought NAAC right to the altar, found it first jilted and then decapitated.
But while Malta-based Mr Quin may have seen this plan fail despite Herculean efforts, expect him to resurface quickly. His professional pedigree is one where standing still isn’t the preferred option.
Investors in many other Spacs that did complete mergers have seen the value of their investments crash as the shares in the companies that they tied up with spectacularly collapsed. It’s all made for an unsavoury and maybe a salutary lesson for many investors. Until the next craze.
