What happened
Shares of Foley Trasimene Acquisition II (BFT) gained as much as 14% on Tuesday after the blank-check company announced it found a partner. Foley Trasimene intends to merge with Paysafe Group, an online payment company, and investors are excited about the possibilities.
So what
It's been a big year for SPACs, or special purpose acquisition companies, like Foley Trasimene, who come to market via an initial public offering with the intent of finding a privately held company to merge with. Foley Trasimene is backed by William Foley, a billionaire investor and owner of the Las Vegas Golden Knights professional hockey team.
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Before markets opened Tuesday, Foley Trasimene announced plans to combine with Paysafe, a London-based company that provides processing services to allow businesses to accept credit cards and transfers. It is currently owned by private equity firms Blackstone Group (BX) and CVC Capital Partners, following a $4 billion buyout in 2017.
The deal includes about $2 billion in equity commitments which would give the merged entity an enterprise value of about $9 billion. After the deal, Foley would become chairman of the company's board, with Paysafe CEO Philip McHugh continuing to lead the new company.
Now what
SPACs have been popular in 2020, but they have also been volatile. That's in large part because a lot of young, pre-revenue companies, in particular electric vehicle companies, have used SPACs to access public markets. Paysafe appears to be a much different animal.
"Paysafe delivers a unique value proposition in large and high-growth markets, such as gaming and e-commerce, enabling the company to generate strong organic revenue growth and margin expansion," Foley said in a statement announcing the deal.
Over time the market will have to settle on a valuation, but this is a real company with real revenue and real customers. There's a lot here for investors to dig into, and so far the markets like what they are seeing.