The name exuded great confidence. Pegasus Acquisition Company Europe – named after the winged horse Pegasus from Greek mythology. As if the founders of the investment fund wanted to suggest at the IPO in 2021 that lenders would rise to great heights with the help of their vehicle, as the Greek hero Bellerophon did on the back of the animal of the same name.
There will be no more such heroic deeds, according to the annual report of Pegasus, which is listed in Amsterdam. With its IPO, the fund raised half a billion euros to look for a promising company to take over. Despite “many attempts”, it has not been possible to find suitable prey, the fund writes.
The investment vehicle of, among others, Bernard Arnault, CEO of luxury giant LVMH and since last year the richest person on earth, had given itself until May 3 to find a company. With that date approaching too close to complete another acquisition, the fund has decided to liquidate itself. If the shareholders agree to that plan, they will receive about 10 euros in return for a share. That’s about the amount they put in.
Unusual stock market entry
Pegasus Europe was born at the peak of a rather short-lived hype: the empty stock exchange shell. Formally, such a fund also has one special purpose acquisition company, in short spac. These are companies that do not make or sell anything, but merely collect money to take over another, unlisted company.
For lenders, such spacs are an educated guess. They know in which sector they will invest, but have no direct influence. For example, Pegasus was looking for a company in the financial services industry. Founders often present their fund as a unique opportunity: those who invest get the chance to invest in a company that is out of reach for the ordinary investor. If the markets are enthusiastic, the returns can be enormous.
Read also: The spac hype has died a quiet death
At the same time, the spac is risky: due to the unusual IPO, a company is screened much less than with a regular IPO. Incidentally, lenders do not give a completely blank check: once the spac directors have found a candidate, the shareholders can vote on it.
In 2021, the spac hype in the Netherlands reached its short-lived peak. Sixteen such funds went public at the time, which together raised 3.8 billion euros. Pegasus was the largest of all those funds, not only within the Netherlands, but throughout Europe. In addition to Arnault, the former CEO of the Italian bank Unicredit and a former Bank of America dealmaker also invested in the fund.
Failed bids
Two years later, the craze is over. At the peak in 2021, 150 spacs worldwide went public per quarter, according to figures from data agency Spac Research. In the first months of this year there were eleven. In the meantime, many of the existing stock exchange shells have failed to find a prey: more than seventy spacs have been closed since the beginning of January, together representing an investment of almost 20 billion euros.
At Pegasus, the plan failed because interest rates rose, those involved said on Monday to business newspaper Financial Times know. As a result, the valuation of companies fell – but many owners do not want to see that yet, they say. In two years, Pegasus has bid on five to ten companies, but each time the takeover price failed.
The story of Pegasus thus ends, just like the last adventure of the eponymous horse and its rider. In the myth, Bellerophon decides to storm Olympus, the mountain where the Greek gods live. They punish this pride and send a fly that stings Pegasus, after which the horse rears up and Bellerophon falls to the ground.