Colin Kaepernick SPAC Deal Collapses, Testing Celebrity Halo

Change Co seemed the perfect buy-in from Colin Kaepernick’s SPAC. The California lender is focusing on traditional bank-disadvantaged minority borrowers, which fits well with the former NFL star’s social justice activism.

But the deal faltered last week over a strange issue: Mr. Kaepernick’s reluctance to integrate into live television, people familiar with the matter said.

Kaepernick has rejected requests from Change executives to sit with George Stephanopoulos on Good Morning America, and declined to participate in interviews as part of the startup, according to an internal document.

Those people said the deal is now dead.

“Change Corporation will proudly consider partnering with Mr. Kaepernick — yesterday, today or tomorrow,” the chief executive of the lender, Steve Sugarman, said in a written statement Thursday praising the quarterback’s previous commitment to racial justice.

A spokesperson for Mr. Kaepernick’s mission progress corp.

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He said the company operates “to the highest ethical standards” and will continue “our work as we look for the best fit to merge with it in 2022”.

Special purpose acquisition companies, or SPACs, are thriving. There are artificial intelligence SPACs, green energy SPACs and even at least a couple of SPACs doing deals with outdoor cooking equipment vendors. Celebrity plumbers are particularly fertile. Shaquille O’Neal, Sammy Hager, Alex Rodriguez, restaurateur Danny Meyer, and former House Speaker Paul Ryan all have plumbers. The basic idea of ​​investors is that their star power, following on social media and financial connections will help the company succeed.

The high wattage fundraising process is controversial. Securities and Exchange Commission Chairman Gary Gensler called for celebrity endorsements in a critique of SPAC’s marketing earlier this month and warned of “misleading hype.”

Mission Advancement went public in March and raised $345 million to acquire a socially conscious company. Mr Kaepernick, who has become a leader of the racial justice movement since NFL teams left his signature after kneeling during the national anthem to protest issues such as police brutality, is the co-chairman of the mission along with Jahm Najafi, who runs the private equity fund and owner Minority in the Phoenix Suns of the National Basketball Association.

Like all SPACs, the mission is looking for a goal that it will merge with, effectively making this company public. By early fall, it hosted Change and by mid-December it was on the cusp of a deal valuing the lender at nearly $1.1 billion, according to people familiar with the matter and investor documents reviewed by The Wall Street Journal.

But the two sides found themselves at odds over whether and how Mr Kaepernick would use his fame to promote it. When Change executives attempted to schedule a session on “Good Morning America,” where Kaepernick likely came under pressure about business and protests that made him a controversial figure and impeded his NFL career, he declined. Mission Executives.

Such an appearance would have deviated from the character of Mr. Kaepernick, who had never spoken of this issue in such a forum and had given few interviews. Instead, he has polished his image through his own social justice initiatives and written appearances, most notably an advertising campaign with Nike. company

and a six-part documentary about his childhood shown on Netflix company

This fall.

The change is what is known as the Community Development Financial Corporation, a special regulatory designation for companies that lend to minority groups, rural residents and other communities that have difficulty accessing mainstream banking products. CDFIs receive financial support from the US Treasury and are often partnered with major commercial banks. Many non-profit organizations. Change is not.

Change was established in 2017 and is run by Mr. Sugarman, a former CEO of the Bank of California. He left that company in a sharp dispute with the board of directors.

The change stemmed from $7 billion in loans in 2020 that brought in $113 million in profits, according to documents presented to potential investors.

When SPAC makes an acquisition, it typically raises new money from private investors, validating the transaction and giving the company cash to fund its growth.

Mission, Change and their bankers have spread to more than 100 potential investors, companies who might want to get a piece of a socially conscious deal or celebrities who might get their run on their fame and money. Mission executives often referred to Mr. Kaepernick as a once-in-a-generation cultural icon; Both sides hoped that his star power would bring in investors and corporate partners.

The documents showed that actor Tyler Perry agreed to the investment, one of the people familiar with the matter said, and that the Atlanta company that manages his money committed $1 million. Kaepernick’s personality helped attract more investors – WNBA stars Diana Taurasi and Maya Moore, music producer J. Cole, rappers Quavo and Nas, according to the documents. But the commitments were not great, and some celebrity investors expected to be paid for any promotional efforts.

The sponsoring group, Messrs. Kaepernick and Najafi, is set to contribute $10 million. Had the deal been completed, they would have received institutional shares in the combined company worth about $80 million, according to SPAC public filings. Kaepernick and the sponsoring group were also to donate up to 1 million shares, worth nearly $10 million, to prepayment assistance efforts to support black home ownership.

But the big names on Wall Street, including BlackRock company ,

Fidelity Investments and the T. Rowe Price Group company ,

Which is among the most active investors in a plumber, said no, according to people familiar with the matter and documents reviewed by the magazine. All three declined to comment.

And according to those documents, the Serena Williams investment fund passed. So did Oprah Winfrey’s money manager. The documents say that Nike and Andreesen Horowitz, whose co-founder is listed on the Mission website as a consultant, also considered the deal and did not comply.

There is a real question whether there [a] The corona effect which translates into investor dollars. We need to question this assumption.


– Steve Sugarman, CEO of The Change Co

A week before Thanksgiving, executives from Mission and Change met with executives from Netflix. The streaming giant had just aired the Kaepernick documentary, and the previous year it transferred $10 million of its cash holdings to Change as part of its pledge to support microlenders serving black communities.

By the time the deal collapsed, Netflix had not committed. Netflix declined to comment.

The mission ultimately had commitments of about two-thirds of the $100 million it was targeting, mostly from two real estate investment firms, Angelo Gordon and MFA Financial. company ,

People familiar with the matter said.

There is a real question whether there [a] The corona effect that translates into investor dollars,” Mr. Sugarman wrote in an email this month to Mission executives. “We need to question that assumption.”

write to Liz Hoffman at liz.hoffman@wsj.com and Andrew Beaton at andrew.beaton@wsj.com

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