Ader SPAC 26 Capital Upsizes IPO in Big Way, Prowls for Gaming Acquisitions

Posted on: January 21, 2021, 11:53h. 

Last updated on: January 21, 2021, 12:57h.

Jason Ader’s special purpose acquisition company (SPAC) 26 Capital Acquisition Corp. (NASDAQ:ADERU) recently went public, boosting the size of its offering in a significant fashion.

Activist investor Jason Ader seen here in 2015. Demand is strong for his new SPAC, 26 Capital Acquisition. (Image: Reuters)

The Miami-based blank-check company initially planned to raise $200 million, selling 20 million units at $10 apiece. In another sign of SPAC fever, the firm closed its initial public offering at 27.50 million units, resulting in gross proceeds of $275 million.

Today is the fourth trading day for ADERU stock, and there are already some signs of enthusiasm for the SPAC as it traded as high as $10.85 earlier this year, well above the IPO price. The average volume through the first three trading days was close to two million shares.

Typically, blank-check stocks trade sideways following debuts. As more come to market, investors are identifying the names that have established deal-making reputations. For example, Chamath Palihapitiya has taken five companies public via SPAC transactions, creating ample enthusiasm for his sixth blank-check firm, which doesn’t yet have a deal.

In the gaming universe, the founders behind SPACs that brought well-known names such as DraftKings, Rush Street Interactive (RSI), and Skillz Inc. to market are among the more prolific rainmakers in the industry. That generates enthusiasm for their new blank-check offerings, and investors may be applying the same sentiment to 26 Capital.

Why This SPAC Could Be a Big Deal

26 Capital doesn’t yet have a merger partner. But a recent filing with the Securities and Exchange Commission (SEC) makes clear where the SPAC is looking for, and gaming is on the list.

“While we may pursue an acquisition opportunity in any business, industry, sector, or geographical location, we intend to focus on industries that align with the background of our sponsor and management. These industries include the gaming and gaming technology, branded consumer, lodging and entertainment, and Internet commerce sectors,” according to the document.

That makes sense because Ader’s SpringOwl Asset Management focuses on turnaround opportunities in the gaming, lodging, and real estate segments.

Ader’s ties to the gaming industry run deep. Prior to branching out on his own, he was a gaming and lodging analyst at Bear Stearns. Institutional Investor recognized him as the best among his peers for 10 straight years. He’d later serve as a board member of Las Vegas Sands from 2009 to 2016.

Online Casinos, Sports Betting Could Be Targets

While 26 Capital doesn’t yet have a specified target, the iGaming and sports betting segments could be areas where the SPAC goes hunting because of Ader’s experience in those niches.

In 2015, he orchestrated a takeover of online gaming firm by the company now known as Entain Plc. In 2018, SpringOwl took a take on gaming software provider Playtech.

Ader’s firm maintains that position today, and last August, he floated the idea of DraftKings acquiring the European technology firm.

“We intend to focus on companies and corporate segments which we believe offer an opportunity for stockholder value creation through the combination of several elements: (i) an attractive valuation, (ii) a clear plan to unlock incremental value through operational and/or strategic improvements, (iii) a partial sale of existing operations to those more highly valued in the public markets and/or (iv) a clear path to bring the target company to the public market,” according to the 26 Capital regulatory document.