A Quick Take On Viscogliosi Brothers Acquisition
Viscogliosi Brothers Acquisition Corp. (VBOC) has sold $75 million from an IPO at a price of $10.00 per unit, according to the terms of its most recent S-1/A regulatory filing.
The SPAC (Special Purpose Acquisition Company) intends to pursue a merger with a company in the neuro-musculoskeletal industry in North America or Europe.
For investors interested in the neuro-musculoskeletal industry, the Viscogliosi Brothers would be a fine place to invest alongside, although my outlook is Neutral due to lack of a previous SPAC track record.
VBOC Sponsor Background
Viscogliosi Brothers has 2 executives leading its sponsor, Viscogliosi Brothers, LLC.
The sponsor is headed by:
- CEO, President and Chairman John J. Viscogliosi, who has two decades of experience in investing in the neuro-musculoskeletal industry and has co-founded a number of medical device companies in the industry.
- Director Marc R. Viscogliosi, who has completed more than $800 million in equity and debt capital raises in the medical device industry.
The SPAC is the 1st vehicle by this executive group.
Viscogliosi Brothers’ SPAC IPO Terms
New York, NY-based Viscogliosi Brothers sold 7.5 million units of units of common stock and one-half warrant at a price of $10.00 per unit for gross proceeds of approximately $75 million, not including the sale of customary underwriter options.
The IPO also provided for one-half of one warrant per share, exercisable at $11.50 per share on the later of 30 days after the completion of our initial business combination and 12 months from the closing of this offering from the closing of an initial business combination, and expiring 5 years after completion of the initial business combination or earlier upon redemption or liquidation.
The SPAC has 18 months to complete a merger (initial business combination). If it fails to do so, shareholders will be able to redeem their shares/units for the remaining proceeds from the IPO held in trust.
Stock trading symbols include:
Founder shares are 20% of the total shares and consist of common stock.
The SPAC sponsor has also purchased approximately 5 million warrants at $1.00 per warrant in a private placement. Each warrant will entitle the sponsor to purchase one share of common stock at $11.00 per share, which is 50 cents less than the public owners of the warrants, which are exercisable at $11.50 per share.
Conditions to the SPAC completing an initial business combination include a requirement to purchase one or more businesses equal to 80% of the net assets of the SPAC and a majority of voting interests voting for the proposed combination.
The SPAC may issue additional stock/units to effect a contemplated merger. If it does, then the Class B shares would be increased to retain the sponsor’s 20% equity ownership position.
Commentary About VBOC
The Viscogliosi Brothers are an interesting management group. They have a well-known venture capital firm in the medical device space and are focused on the neuro-musculoskeletal industry, which is a subspecialty that is not a common focus among venture capitalists or entrepreneurs.
The musculoskeletal industry alone was an estimated $57.4 billion in 2017, according to Research and Markets.
That industry is forecast to grow at a CAGR of 5.5% through 2023, a moderate growth rate.
Investing in a SPAC before a proposed business combination is announced is essentially investing in the senior executives of the SPAC, their ability to create value and their previous SPAC track record of returns to shareholders.
So, in a sense, investing in a SPAC can be likened to investing in a venture capital firm as a limited partner.
In the case of this particular management group, there is no previous SPAC track record, which is a negative signal.
However, for investors interested in the neuro-musculoskeletal industry, the Viscogliosi Brothers would be a fine place to invest alongside.
So, while my outlook on the SPAC is Hold due to the lack of previous SPAC vehicles, I’m impressed by the Viscogliosi Brothers in general, and a case could be made for those investors interested in a ‘venture capital’ type investment opportunity.