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LF Capital Brings on BlackRock Funds as a Sponsor/Anchor Investor
by Kristi Marvin on 2018-06-14 at 1:27pm

BlackRock Funds Now Sponsoring/Anchoring Both LF Capital and VectoIQ

LF Capital Acquisition Corp., a SPAC focused on the Fintech sector, filed an amended S-1 yesterday with a few important changes.  Namely, BlackRock Funds is now part of the Sponsor Group AND they are coming on as an Anchor Investor to the tune of 1.3365 million units of the 13.5 million being offered in the IPO.  This is the second recent offering (the other being VectoIQ) that BlackRock Funds has participated in the capacity of Sponsor/Anchor in less than a month.  Plus, both SPACs have a tech focus – VectoIQ in Automotive/Transportation Tech and LF Capital in Fintech.  Sounds like BlackRock wants in on the future…

Let’s look at the details:

 

Anchor Investor (Expression of Interest)

The filing lists the section detailing the Anchor Investor purchase as an “Expression of Interest”, a term which gives BlackRock some wiggle room considering they have only “expressed an interest” in purchasing 1.3365 million units in the offering, or $13.365 million worth. However, the filing goes on to say…

“…the anchor investor has agreed with us that, if it does not own a minimum of 1,336,500 public shares (which amount will be reduced on a pro rata basis if less than 13,500,000 units are sold in this offering) at the time of any stockholder vote with respect to an initial business combination or the business day immediately prior to the consummation of our initial business combination, it will transfer to the sponsor all or a portion of the 267,300 founder shares it purchased prior to this offering on a pro rata basis.”

In layman’s terms:  BlackRock loses those valuable Founders Shares that they purchased for a paltry $1,980 (that’s not millions, that’s $1,980.00) if they own anything less than their original purchase at the business combination.

Additionally, you might be asking why 1.3365 million units? Well, that keeps the purchase under 10.0%.  Blackrock’s purchase will be 9.9% of the total units in the offering to be exact, to avoid a 13-G filing.

Founders Shares

As the part of the Sponsor group, BlackRock purchased 267,300 founders shares for $1,980. Below is the breakdown of ownership from the filing.

Beneficial Ownership of LF Capital

Private Placement Warrants

BlackRock is also participating in the Sponsor purchase of the private placement warrants.  The total private placement warrants purchase for the Sponsor group is 5,600,000 warrants at $1.00 and BlackRock’s portion is for 443,520 warrants, also at $1.00.

Summary

In summary, BlackRock Funds gives the SPAC confidence in a minimum amount in trust at business combination ($13.365 million), but it also lends the SPAC a bit of cachet, or credibility. Both of which are important at IPO and more importantly, to potential targets.  It’s a big positive for this deal.

 

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