Fortissimo Capital sets up Wall Street shell company
The company’s subsidiary submitted a draft prospectus to the SEC for an issue of four million units at $6 a unit.
Tali Tsipori 2 Feb 06 10:21
On Tuesday, Fortissimo Acquisition submitted a submitted an initial draft prospectus to the US Securities and Exchange Commission (SEC) to raise $24 million through an issue of four million units at $6 a unit. Each unit will include one ordinary share and two options on ordinary shares exercisable at a $5 strike price. Fortissimo Acquisition granted Early Bird Capital, the underwriter for the issue, an option to buy an additional 600,000 units, which would increase the proceeds by $3.6 million. Early Bird was also the underwriter for an issue by Israel Technology Acquisition. Fortissimo Acquisition’s ticker symbol has not yet been determined.
Fortissimo Acquisition is a blank check company having no content that is willing to assume the activity of an Israeli company, thereby enabling that company to enter Wall Street through the back door. Fortissimo Acquisition was founded four days before the end of 2005. According to its prospectus, it does not plan to confine itself to companies from any one sector. It is open to Israeli companies and companies outside of Israel that it believes will benefit from establishing operations or facilities in Israel.
Fortissimo Acquisition is a subsidiary of Fortissimo Capital, headed by managing partner Yuval Cohen, co-founder and former partner in Jerusalem Venture Partners. Fortissimo Capital invested $25,000 in the shell corporation, and owns 90% of its capital. Special advisors Yair Seroussi and Michael Chill own the other 10%.
Fortissimo Acquisition’s prospectus indicates that Fortissimo Capital has undertaken to buy units worth $2 million in a private placement, to take place simultaneously with the public issue. Net proceeds from the issue will therefore total $22.9 million, which will be deposited in a trustee account at Lehman Brothers
Fortissim Capital invests in mature companies in the technology market. The fund recently closed an $80 million financing round from Israeli investment institutions, including Migdal Insurance (TASE: MGDL) and the new (established on or after January 1, 1995) Makefet pension fund. Fortissimo Capital has invested in two Israeli companies to date: Nur Macroprinters Ltd. (OTCBB: NURM) and Telrad. The fund jointly owns 55% of Nur Macroprinters, together with Kanir Investments Ltd., and 39% of Telrad, together with HarbourVest Partners and Poalim Ventures.
The idea behind blank check companies sounds nice, and perhaps even logical, but it has not proved itself in practice. Two Israeli shell corporations have been floated to date, but have not yet found a merger candidate. A shell corporation controlled by former Tower Semiconductor CEO Carmel Vernia and Matty Karp has not made it to the capital market. Furthermore, every new blank check company faces stiff competition. Over 30 blank check companies have gone public in the US over the past two years, and only a small proportion of them have found a merger candidate.
Published by Globes [online] - www.globes.co.il - on February 2, 2006