Capping off the most active year on record for blank cheque companies, a group of fintech and proptech experts have completed the IPO of a SPAC targeting real estate software providers.
Southport Acquisition Corporation raised $230m with the intention of merging with a “leading financial services software or fintech partner, with particular focus on mortgage and real estate software verticals,” documents filed with the SEC show.
Although no target has yet been chosen, the company said it will target businesses valued at $1bn-$2bn, generating between $50m-$100m of revenue.
So far this year, SPACs – vehicles created to take a private company public through a merger – have raised $161.5bn, nearly double 2020’s $83.4bn.
Seen as an alternative to going public through a traditional IPO process, SPACs have become increasingly popular in real estate. Among the most high profile examples in 2021 was WeWork, which finally went public in October, two years after its first IPO attempt fell through.
Experts in fintech, real estate and… baseball
Southport Acquisition Corporation is headed by Jeb Spencer, co-founder and managing partner of TVC Capital, a growth equity fund that has invested in everything from loan origination software to digital restaurant management and cannabis startups.
The other board members are:
- Jared Stone: co-founder, MD and investment committee of global private equity investment firm Northgate Capital from 2001 to 2015
- Sigmund Anderman: co-founded Ellie Mae, a mortgage software company that last year was sold to financial services company Intercontinental Exchange for $11bn
- Cathleen Schreiner Gates: CEO of mortgage software SimpleNexus and previously VP of sales and marketing at Ellie Mae
- David Winfield: adviser to the executive director of the Major League Baseball Players Association, former MLB player (and Hall of Famer) and president of business development, consulting and advocacy services firm Winfield & Winfield
Why target the mortgage market?
Southport Acquisition Corporation identified several statistics to explain the SPAC’s focus:
- Home sales in the US totalled $2.2tn in 2020
- Mortgage originations totalled about $3.8tn
- There is a $100bn home insurance market and $16bn title insurance market powered by legacy companies the SPAC believes are outdated
The investor prospectus said: “We believe the applications and end markets of fintech are vast and provide great flexibility for us to seek the right opportunities to create shareholder value.”
Further down, it said: “We believe the size of the home sales and mortgage origination markets has enabled the growth of real estate and mortgage-related technology companies… We seek to partner with companies that are creating new technology-enabled solutions to provide a greater offering for consumers.”