An Introduction to the Jaws (NYSE: JWS) Acquisition Corporation
The JWS SPAC debuted on the New York Stock Exchange on the 13th May 2020. The company chose to open to the public markets with a sizeable 60,000,000 units at a price of $10.00 per unit.
This IPO valuation of $600 million seems ambitious but pales in comparison to the fact that the companies initial prospectus was seeking $500 million.
Having announced the companies choice of Cano Health to merge with.
Perhaps this up-sized IPO was necessary considering the sector? Maybe celebrity involvement doesn’t serve much purpose?
Join us as we take a close and thorough look at the JWS SPAC and consider how the Cano Health merger could potentially alter the face of elderly healthcare forever.
Taking a close look at the filings, the official sponsor is Jaws Sponsor LLC. With the allocated underwriter being Credit Suisse Securities. There isn’t much to see with this new found sponsor.
We seek to capitalize on the decades of investment experience of our FoundersJAWS Acquisition Corp. Press Release 2020
There certainly is a lot to see when considering the founders!
Mr Barry Sternlicht hardly needs any introduction. An icon in the investing and finance world since the early ’90s. This world-renown entrepreneur has a rich deal-making history that culminated in his creation of Starwood Capital in 1991. Having sat as the Chairman and CEO of the private alternative investment firm ever since.
This firm has a particular focus on global real estate, hotel management, oil and gas and energy infrastructure and currently maintains around $60 billion worth of assets under management.
Mr Sternlicht prides himself on capitalizing on emerging consumer trends. Although his experience is extensive in both the public and private sector and across a multitude of industries. His most relevant experience are as follows.
The founding of a number of hotel chains: Baccarat Hotels, 1 Hotel and Treehouse Hotels. As well as the investments made within a number of consumer-facing companies most notably Lyric, a hospitality platform for business travellers.
Lyric, its sector and business model can be most compared to Cano Health and its goals as shall be later discussed.
The current CEO of the JWS SPAC also hold the identical position at the Brown University’s endowment, having previously served as the CIO of the endowment fund from 2013 to 2018.
Responsible for the $4.1 billion dollar endowment and head of the 21 member investment team there. Currently overseeing the University’s $1.2 Billion budget in addition to his endowment responsibilities.
Overseeing a wide array of functions from asset allocation, management, selection and direct investments to name a few. Assets that span both the public and private sector across a multitude of strategies.
Furthermore, the relationship between Mr Dowling and Mr Sternlicht extends to his position as Advisory Board Member of Jaws Estates Capital.
Cano Health – JWS SPAC Selected Target
Cano Health is at the forefront of an interesting tech/medicare system merging that has become increasingly more prevalent across international markets.
To become the national leader in primary care by improving the health, wellness and quality of life of the communities we serve, while reducing health care costs.Cano Health Press Release
These lofty goals begin with the primary focus of the company, seniors. This large and growing “Medicare Advantage” market is currently valued at around $270 billion and is currently growing at 14%.
Under the guidance of Dr Marlow Hernandez. The company has faired exceptionally and going public is the next logical step.
Under Hernandez’s leadership, Cano Health has become one of the fastest-growing and most respected health care companies.Cano Health Website
This cash injection through the merger has been timed perfectly and is set to enable Cano to expand and capitalize on fresh demographics before the competition.
Want more information? Take a closer look at the Merger Presentation.
Mr Racich has the crucial role as CFO of the JWS SPAC. However, his relationship to the Founding partners is clear. Having served as the CFO of Jaws Estates Capital LLC. This is the personal family office of Barry Sternlicht.
Prior to that, he served at another Limited Liability Company, Frydland Stevens from 2007 to 2014. Following another stint at Jaws Estates Capital LLC from 2005 to 2007.
A highly qualified accountant and clearly no stranger to the independent business entity that is an LLC, Mr Racich has a particular focus on tax-related issues and filings, although his contribution to the SPAC bar the mandatory position placement from the sponsor might be questionable.
Douglas I. Ostrover
The sheer depth of experience that Mr Ostrover brings to the JWS SPAC is pretty incredible. His past dealings in corporate finance, capital markets and financial services make him a truly invaluable board member.
The Co-Founder of Owl Rock Capital Partners, also serving as the CEO and Co-CIO. Mr Ostrover has a thorough understanding of his company and has actually led Owl Rock through a recent merger (NYSE: ORCC).
This merger maintained the involvement of the Altimar Acquisition Corp. (NYSE: ATAC).
I don’t think I need to reiterate the hands-on experience that Douglas Ostrover underwent through taking his own business, that manages around $45 Billion of assets, public. Dealing with the open markets and a SPAC merger.
In 2008, Mr Weprin founded AJ Capital Partners. This company is headquartered in Chicago and deals primarily with private real estate. Serving as CEO, this isn’t your basic real estate organization.
The company focuses on hospitality with a particular emphasis on luxury accommodation. AJ or “Adventurous Journeys” has been faring fantastically with Mr Weprin actually founding the Graduate Hotels and serving as CEO since its creation.
Although wholly private ventures, Benjamin Weprin has some quality experience in regards to real estate asset management and that is particularly important, especially in the targeted market of the JWS SPAC.
Extremely well-rounded and bringing a quality background to the table, is Mr Michael Baldock. Having served as the CFO and Director of Abcam PLC.
This life science tools company has certainly fared extremely well across its reasonably short period of time having gone public. As CFO and Director, Mr Baldock’s positive influence on the company can certainly be seen reflected in the upward trending share price.
If that is not enough to convince you, looking further back in his illustrious resume also reveals the position of Managing Director as the Global Head of Healthcare and Head of Investment Banking, Americas for HSBC.
The sort of experience that sitting as Managing Director of one of the largest multinational Banks on the planets as well as seeing Abcam go public is something that the JWS SPAC will definitely benefit from.
Deal Flow Analysis
The most accurate point of view when seeking a deal analysis would be looking closer at Starwood Capital Group and its relevant assets under management since 1991.
Sifting through the $60 billion assets managed by the group. The most relevant within the real estate portfolio are the following:
- Starwood Property Trust (NYSE: STWD)
- Starwood Hotels & Resorts Worldwide (formerly NYSE: HOT)
- Invitation Homes (NYSE: INVH)
- Equity Residential (NYSE: EQR)
A thorough analysis of these companies shows appropriate growth upon entering the public markets. However, the noticeable downturn across the previous financial year can clearly be attributed to the multi-sector wide downturn.
These industry drawbacks spread across, but are not limited to: the travel, tourism and leisure industries. However, the pipeline analysis of the above-selected companies was positive and the deal flow of a healthcare/tech company such as Cano is set to be even more so.
Post Deal Value
The ability to generate post-deal value could be of some concern for the JWS SPAC and its investors. Considering the sector and sort of assets this merger would maintain (largely real estate and tech).
It could be argued that the generation of post-deal value is somewhat guaranteed. However, the sector-wide upsurge across healthcare and technology due to the global pandemic could exist in a speculative bubble.
Set to go public later this year, the JWS SPAC certainly seems to be faring well on the open market.
As to whether or not Cano Health can report similarly good news within the upcoming financial year, remains to be seen.
The JWS SPAC In Summary
This is clearly not Barry Sternlicht’s first rodeo!
The billionaire investor and investment fund manager clearly knows exactly what he is doing with multiple other SPAC’s currently in the works.
Due Diligence has been executed and Cano Health seems like a perfect target to allocate the sizeable funding of $600 million in going public, especially in the emergent healthcare and tech sectors.
As no stranger to the world of mergers, acquisitions and IPO’s. Potential investors have little or nothing to fear from the JWS SPAC.