Martin Franklin: blank-cheque vehicle is a bet on a veteran deal maker

Serial dealmaker Martin Franklin is back. The veteran of buyout vehicles listed his latest blank-cheque company, Admiral Acquisition, in London on Wednesday, raising $550mn (£440m). 

It is a bold move. The tide has turned against special purpose acquisition companies. These took off in the US in 2020 and the trend spilled over to Europe. But many Spacs have been wound up after failing to find acquisition targets. This fate has befallen even some of the biggest, including Pegasus Europe, backed by LVMH founder Bernard Arnault.

Investors put money into a blank-cheque company if they believe in the talents of its founders. Franklin’s CV is extensive. Previous Spac hits include his investment in Burger King, alongside billionaire hedge fund manager Bill Ackman. He also turned a $120mn jar-maker into the US consumer products giant Jarden that in 2016 combined with its rival Newell Rubbermaid in a $16bn deal.

Shares in Franklin’s Admiral Acquisition are priced at $10 each. Franklin and his fellow founders committed a total of $100mn.

Will he succeed whether others are failing? Admiral has tweaked the Spac formula: founders will not get free shares at the close of an acquisition. They will also have to participate in acquisitions instead of redeeming shares. Both changes should instil greater confidence in other shareholders and target companies.

Admiral will also test new rules for UK Spacs introduced in 2021, including ending the practice of suspending shares when an acquisition is identified.

Like all blank-cheque companies, there are risks. Shareholders do not know what they are buying into. Admiral is yet to give away any clues about which sectors and geographies it will target.

An argument exists that blank-cheque companies offer a listed alternative to private equity funds, also not always clear about how investor money will be put to work.

In reality, the success or failure largely relies on the prowess of the sponsor. On that front, Franklin has a decent record.