Newly hatched finance company ECN Capital Corp. is moving forward with plans to raise up to $700-million to fund growth projects after cancelling a planned deal with special purpose acquisition corporation (SPAC) Infor Acquisition Corp.
ECN Capital was spun out of Element Financial Corp. last month and had planned to raise $220-million by joining forces with Infor. The two companies mutually agreed to cancel that transaction on Wednesday, as Infor shareholders were not expected to approve the transaction at a vote scheduled for Oct. 24.
ECN Capital CEO Steve Hudson said Thursday that while the Infor transaction offered capital on attractive terms, the company has a number of other options for raising money to expand the business, including selling preferred shares and selling all or a portion of its aviation leasing funds to institutional investors.
Mr. Hudson is a serial entrepreneur who launched both Element Financial and Newcourt Credit Group. In the past, Mr. Hudson and his team have bought and expanded finance businesses acquired from companies such as GE Capital and auto leasing companies TLS Fleet Management and PHH Arval.
In a recent investor presentation, done before the Infor transaction was set aside, ECN Capital said it is working on five potential acquisitions, three that involved buying finance companies and two opportunities to build businesses by backing proven management teams. The five businesses ranged in size from $500-million to $5-billion.
To fund these projects, ECN Capital said in the investor presentation that it may sell up to $300-million of preferred shares. The company also expects to raise up to $400-million by selling the assets in its aviation leasing fund to institutional investors such as insurance companies, while earning a fee from continuing managing the fund.
The cancelled transaction between ECN Capital and Infor was the first deal launched by a Canadian SPAC. Six of these companies went public in 2015 and early this year, raising a total of $1-billion, but none of the SPACs have successfully completed an acquisition. SPACs have two years to find an investment, or regulations require them to refund their capital to backers.