NBA star Kevin Durant aims to raise $200 million with new SPAC
Brooklyn Nets forward Kevin Durant is the latest celebrity to back a blank check company, amid a frenzy of special purpose acquisition companies this year.
Durant and his manager and business partner Rich Kleiman filed registration documents for Infinite Acquisition Corp. to raise $200 million in an initial public offering to make acquisitions in sports, health and wellness, food tech and supply, e-commerce, and crypto and digital assets.
The deal is the latest in a string of celebrity-backed SPACs, which earlier this year prompted the Securities and Exchange Commission to issue a warning to investors about celebrity-backed investment vehicles, stating that “it is never a good idea to invest in a SPAC just because someone famous sponsors or invests in it or says it is a good investment.” So far in 2021, more than 512 SPACs have debuted in the U.S., raising nearly $140 billion in the process, according to SPAC Research. By comparison, 247 SPACs listed in the U.S. a year ago, having raised $83.4 billion.
Earlier this year, Colin Kaepernick’s social justice SPAC, Mission Advancement Corp., raised $300 million for plans to acquire a consumer brand. Alex Rodriguez started a SPAC called Slam Corp., while Jay-Z’s SPAC merged last year with two companies to form California’s largest cannabis firm. Retired House Speaker Paul Ryan raised $360 million for his SPAC Executive Network Partnering Corp., and Grammy singer-songwriter Ciara Wilson’s SPAC Bright Lights Acquisition Corp. went public in January. In October, WeWork went public after merging with BowX Acquisition Corp., a SPAC that includes NBA legend Shaquille O’Neal among its advisers.
The name recognition of celebrities can potentially open doors for acquisition deals, says Jay Ritter, a finance professor at the University of Florida. And celebrities have the potential to drive up the stock price. When Digital World Acquisition Corp. announced plans to merge with Donald Trump’s social media venture this month, the stock price exploded, jumping more than 1,000% in two days before falling back to earth. (New reports claim that because merger negotiations weren’t disclosed, the SPAC may have violated securities regulations.)
SPACs sponsors can also make hay from the deals: If the SPAC’s backers put in $10 million and sell shares for $10 a pop, they can easily turn that investment into $50 million or $60 million, says Ritter. “The most you can lose is $10 million and a little time and effort,” he says. “So it’s an attractive investment.”
Durant’s SPAC is the latest in a series of business deals by the NBA star. Last year he and fellow NBA star Matthew Dellavedova invested in StarStock, an online marketplace for buying and selling sports trading cards. He has also backed Alt, a platform that lets individuals invest in sports cars as they would a stock.
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