Special Purpose Acquisition Companies (SPACs or blank check companies) have not had a great press recently. The massive increase in the number of SPAC deals in the US as a means of listing privately held companies is often cited as evidence of an over-exuberant bull market. While this is hard to dispute, it does not mean that SPACs, often known as shell companies in the UK, are all created equally.
In February this year, the Dowgate team was approached by serial technology entrepreneur Vin Murria. We have known Vin over the last 15 years and know her to be a skillful deal maker and value creator, having backed her previous companies. In her time, Vin has completed the acquisition of over 40 software businesses and created industry-leading groups that have been sold into private equity for significant value uplifts.
Many successful entrepreneurs have combined a certain degree of insight and skill with a large helping of luck and do this type of deal. What distinguishes Vin is that she has managed to pull off these deals on several occasions, making it difficult to conclude that Vin is serially lucky. We knew it would be a good meeting.
Vin’s approach to Dowgate was via a previously listed shell company, The Marwyn Acquisition Vehicle 1 Ltd. She used a deck that essentially comprised just four slides, of which only two described the type of business she intended to acquire and what she wanted to do with it. The other two slides outlined the terms and structure of the cash raise of £130m.
Vin presented to us about the opportunities she sees in making “platform” acquisitions in the UK B2B software sector and how to build financial scale through M&A, up-selling and cross-selling. At our next investment meeting the team was unanimously in favour, subject to normal process due diligence. Our previous record of supporting Vin along with our early decision to invest resulted in a good allocation in a well subscribed deal.
Vin’s ability to conclude such a significant capital raise on the back of four slides and a 20-minute chat puts her in a particular category of entrepreneur. We would argue this compares with the advertising entrepreneur Sir Martin Sorrell, whom the team backed in his highly successful SPAC, S4 Capital, three years ago.
Since the AdvancedADVT deal’s announcement, the shares have traded at a decent premium to its cash value, indicating the market’s positive expectation of her to be able to deliver an attractive opportunity. A seasoned technology analyst commented that he had made the mistake of underestimating Vin in her early days, concluding that her plans to cross-sell software services in the enterprise software space were often articulated but never achieved. He confessed that not believing her cost his company about £10m in fees over the following few years, before she later sold out to private equity for a large gain. He now thinks she is in a category of one in the UK enterprise software sector today.
Having helped cornerstone the £130m equity raise for the renamed AdvancedADVT, we are hopeful that Vin’s knowledge of the sector and her proven ability to catalyse change and value creation will serve our clients well over the coming years. We are not prepared to underestimate her, we think this will prove to be a very special purpose acquisition company.
Dowgate Wealth’s holding in the above stock: 4,101,138 shares (reported on 30/04/21)
Written by Jeremy McKeown
