Arnault and Mustier join the $100bn Spac boom

LVMH founder Bernard Arnault and former UniCredit chief Jean Pierre Mustier are creating a special purpose acquisition vehicle to invest in European financial companies, joining the $100bn Spac boom.

Tikehau Capital and Financière Agache, a holding company controlled by Groupe Arnault, will sponsor Pegasus Europe, which will be co-run by former Bank of America dealmaker Diego De Giorgi, Mustier said in an interview.

Pegasus will be listed in Amsterdam, which is emerging as the European capital for the blank-cheque companies after becoming the main beneficiary of the shift of euro-denominated equity trading away from London since Brexit.

The Spac will look to raise in the low hundreds of millions of euros and JPMorgan is said to be advising, according to a person familiar with the matter. Pegasus declined to comment on the size, citing pre-listing rules.

Spacs raise money by listing on a stock exchange and then use the proceeds to take promising private businesses public through reverse mergers. Shareholders do not know in advance which businesses Spacs will target, so commit based on the records of those running and sponsoring them.

Arnault is one of the world’s richest men. He has a fortune of $114bn that he built up over four decades of dealmaking that created the world’s largest luxury group, including the Louis Vuitton, Dior, Givenchy, Veuve Clicquot and Dom Pérignon brands.

Pegasus is among the first of an expected wave of European Spacs, which until now have been a largely US phenomenon. Telecoms billionaire Xavier Niel, has launched two, one focusing on TV production and the other specialising in organic food.

Europe needs more growth capital to support companies and the Spac can be the missing instrument between a traditional IPO and private equity financing

Mustier, De Giorgi, Tikehau and Financière Agache will buy at least 10 per cent of the Pegasus IPO and “enter into a substantial forward purchase agreement”, according to a statement.

“Europe needs more growth capital to support companies and the Spac can be the missing instrument between a traditional IPO and private equity financing,” Mustier told the Financial Times.

The rationale behind Pegasus is that European financial services — particularly asset management, insurance and fintech — are ripe for consolidation because ultra-low interest rates, new regulations and technological advances have disrupted their business models.

“This is not just about a quick deal. We can offer long-term investment and partnership with our expertise,” Mustier said. The reputation of the four sponsors “reassures companies that we have a long-term outlook and deep understanding of the financial sector,” said Tikehau co-founder Antoine Flamarion.

Last week, Mustier stepped down from UniCredit after four years in charge, following a dispute over strategy.

A number of European bank CEOs are in the process of launching Spacs, including Mustier’s friend and former Credit Suisse chief executive, Tidjane Thiam, who is listing a $250m financials-focused vehicle in New York. Former UBS CEO Sergio Ermotti, ex-Commerzbank boss Martin Blessing and Barclays investment banker Makram Azar are among others.

Spac founders are attracted by the potential for large rewards from a successful acquisition target. Spac founders often receive 20 per cent of its shares for a nominal fee.

Additional reporting by Arash Massoudi