Introduction to the 26 Capital Acquisition (NASDAQ: ADER) Corporation
SPACs are looking more attractive than ever to private companies looking to go public and avoid the tedious IPO process. The ADER SPAC is the perfect example of this mentality trickling into the lesser-known gaming sector of the financial markets.
With an upsized IPO of $275 million (from a considerably more manageable $200 million), the 26 Capital Acquisition Corporation is not a ticker you would want to miss. Hitting the open markets from 20th January 2020 with the standard $10 units. Each unit has the standard common stock share and a half warrant attached.
A sector that has seen nothing but growth over previous years with some substantial SPAC offerings within the industry across the previous financial year. What exactly is the ADER SPAC looking at? And has it got what it takes to win big?
Sponsor Analysis & Context
The listed sponsor is 26 Capital Holdings LLC. The sole book runner is Cantor. The clear deal flow shall arrive through 3 primary avenues:
- The sheer stopping power of Jason Ader (the hint is his surname!)
- His well established multi-sector Asset Management company – SpringOwl
- The ingrown network of his Board of Directors
The CEO and Chairman of the ADER SPAC. His namesake Acquisition company with no better man at the helm. A long term veteran of the gaming and gambling sector. Currently sitting as CEO of SpringOwl Asset Management LLC. Co-Founded by Ader, this New York-headquartered asset management firm has led multiple sponsors filled corporate restructures. The main focus of the company has been within real estate, gaming and accommodation.
Prior to the establishment of SpringOwl, Mr Ader was considered one of Wall Street’s top analysts on the gambling and leisure sector. Currently maintaining high-level positions across a number of gambling-related companies:
- Las Vegas Sands Corporation (NYSE: LVS) – $42 Billion valuation
- International Game Technology (NYSE: IGT) – £3.72 Billion valuation
- Playtech (LSE: PTECH.L) – £1.4 Billion valuation
Ader is an extremely outspoken individual, especially amongst the gaming and gambling sector. He is a great proponent of the US legalization of online casinos and offering more local sports betting options. Currently advising and educating the masses in looking to maximise value and liquidity through associations with foreign companies (such as Playtech).
Founded in 2013, SpringOwl has been operating successfully as an independent sponsor and asset manager. Based in New York, the company has since raised and distributed over $1 Billion across multiple partnerships in private equity, hedge funds, high net worth individuals and family offices.
Headed by none other than Jason Ader (CEO ADER SPAC) and 100% owned by the Senior Management. SpringOwl has a fairly diverse portfolio but has focused on the REGAL industries: Real estate, Gaming, Hospitality and Leisure.
The “family office” and individual investor backing of the company ensures the ability to raise capital through a deal-by-deal basis and offers a level of intimacy that many similarly-sized asset managers and sponsors cannot. The company is also able to operate outside the realms of the United States with many international deals (primarily in Europe).
ADER SPAC Key Team Members
An incredibly well known and highly respected individual all across the online gambling world. Holding the COO position at Playtech and the CEO position at Stars Group. During his time at Stars, Mr Ashkenazi spearheaded the $4.7 billion merger between Flutter (market cap £26 billion) and Stars Group.
Clearly Mr Rafi Ashkenazi has a deep and intricate understanding of the complexities associated with the online gambling sector. He has proven himself and maintains a wide range of connections and influence in the relevant sectors. His extensive history with Jason Ader through the Playtech merger is a great sign of quality synergy between the two behemoths.
A true icon within the gambling sector. Mr Kaminkow has not only seen the industry shift through the technology era but has maintained a guiding hand through the incredible change the sector has seen. Considered a “legend” within the industry, a former video game and pinball designer that revolutionized the slot industry by shifting gambling into video game software in 1999.
Leading to his position as Vice President of Game Design at Zynga Inc. Zynga is one of the largest mobile game providers on the planet and is hugely influential. Currently a special advisor in regards to the Chief Product Officer at Aristocrat. This gambling software and games publisher highlights the narrower path within the gambling and gaming sector that the ADER SPAC is potentially focusing on.
Gregory S. Lyss
Sitting as the COO of the ADER SPAC, there clearly exists a lot of respect holding Mr Lyss in such high regard. Sitting on the investment team of Saddle Point Management, a New York-based Asset Management firm. From 2011 till 2019, he sat as the CIO of TABLE Management.
TABLE is the single-family office for none other than the iconic Bill Ackman. Well known within financial circles and across the investing world, the sheer level of trust in putting the multibillionaire’s fortune within the extremely capable hands of Gregory S. Lyss is a fantastic sign.
Although there is a severe lack of gambling and gaming sector experience from Mr Lyss. His extended history across the investment world from analyst to hedge fund manager ensures a fantastic addition to the ADER SPAC.
Targeted Sector & Market Criteria
The gambling and gaming sector needs more than a flashy VC. The industry may be glitzy and glamorous but is still seeded with backhanded deals and questionable pipe flow. However, the involvement of someone as radical and outspoken as Mr Josh Ader is certainly a clear indication.
Ader’s investment strategy has often clashed with corporate leadership and boards, having demanded drastic changes from companies that SpringOwl has invested in.Ted Menmuir – SBC News – 2021
This kind of disruptive and innovative investing and target identification is required within the sector. The wide range of sectors available to the team includes: gaming, gaming technology, fintech, lodging, entertainment, branded consumer and internet commerce.
We have four deals we are looking at closely. One is gaming technology. One is fintech but the founders/principals have some gaming DNA. Another is internet commerce and you’ll see, if we do a deal, how this business model is connected to the gaming industry. The last company is in the entertainment industry but has some commonality to [previous Ader companies] IGT, Las Vegas Sands, Bwin and Stars Group. Of course, there’s no guarantee we’ll get these deals done.Jason Ader – 2021
The $275 million Blank Check is traditionally a good indicator of the potential enterprise value of a selected target. However, the nature of the industry as well as the focus on limitlessly scalable technology and digital venture make this trust value deceptive.
The international nature of Josh Ader’s sponsor, SpringOwl. Compounded by his distaste for the archaic US rulings on local digital gambling alternatives, certainly suggests an international target. The inclusion of Mr Rafi Ashkenazi certainly supports this stance.
Post Deal Value
The ability to generate Post Deal value can be easy enough to estimate in the more traditional sectors. However, the gambling and gaming sector is considerably murkier and the importance of connections and networking is really exemplified.
The past deals that Mr Josh Ader has helped pioneer and pushed for through personal means as well as through the means of SpringOwl Asset Management are unprecedented. Across recent times, there has been an increasing surge within the gambling sectors with companies like DraftKings(NASDAQ: DKNG) going public through a SPAC merger.
The attractive cash-orientated nature of these companies ensures a faster time until shares start paying dividends. Furthermore, the focus of the ADER SPAC on the tech, mobile and online platforms allows a very cheap and rapid scaling of the potential target.
ADER SPAC In Summary…
The Gambling sector is starting to see the many benefits of the SPAC-assisted IPO. These powerful and influential companies are starting to understand the great benefits of the technological revolution but it is the rulings and legislations of various nations that are still holdings them back.
The ADER SPAC brings a solid, respectable team with a quality deal flow to the open markets. The upsizing of about $75 million certainly reflects the solid investor faith in the venture, although the share price has revealed a slightly different story in recent times.
With his fingers in every gambling industry pudding, Mr Josh Ader is certainly the man to identify a quality target. With the assistance of his global team, the ADER SPAC could likely identify targets from Europe across to Asia. Regardless of the selected target, the House will always win.
But the team at 26 Capital Acquisition Corporation is certainly looking to bring the house down!