Genesis Park Acquisition Corp. (NYSE: GNPK), a blank-check company started by an affiliate of Houston-based private equity firm Genesis Park LP, on March 25 unveiled plans to take space infrastructure firm Redwire public.
Paul Hobby, a founding partner of Genesis Park and CEO of Genesis Park Acquisition Corp., told the Houston Business Journal that the announcement came right around a year after his journey with the special purpose acquisition company began. During the year marred by the Covid-19 pandemic and as travel largely declined, the Genesis Park SPAC was hard at work evaluating potential deals in the aerospace and aviation industries and assembling a working board of experienced corporate executives.
The irony was lost on no one that the team was eyeing deals in mobility at a time when people couldn't move, Hobby said.
"We think that mobility is a great sector; it'll be different, but it'll come back in its various aspects," Hobby said. "But we were all doing that from an incredibly immobile situation late summer, early fall. I think I'll always look back on that with a smile because the irony is so obvious."
Last year saw a flurry of SPAC activity across the nation, including the creation of Genesis Park Acquisition Corp. and many other blank-check companies based in the Houston metro region. Amid the boom in popularity, SPACs have a "bad-ish reputation" right now — perhaps well-earned, Hobby said.
He credits the Genesis Park SPAC's success so far to the operational experience of the leadership team and a sector-specific focus. Genesis Park Acquisition Corp. is led by David Siegel as chairman, Hobby as CEO and Jonathan Baliff as president and CFO. Siegel and Baliff have both held prominent roles at aerospace and aviation companies.
Hobby does see some reasoning behind the investor interest in blank-check companies taking private firms public. The number of public companies in the U.S. has been on the decline for some time now, while the number of private companies has been growing, leaving fewer places for investors to deploy equity investments in the public markets.
"I think the public markets want more choices, and this SPAC phenomenon is a way for them to create those choices in a big hurry — in some cases by force," Hobby said. "Obviously, there's so little yield on the fixed-income side of the market that you've got lots of equity dollars with fewer and fewer choices."
Genesis Park Acquisition Corp.'s merger with Jacksonville, Florida-based Redwire is expected to be completed by the end of the second quarter. And while Hobby was barred from speaking substantively on the deal ahead of its closing, he spoke generally about the opportunities he and Genesis Park Acquisition Corp. saw in the space infrastructure and technologies sector. Looking at the large number of launch permit applications backed up with the Federal Aviation Administration, the company knew demand was there, Hobby said.
"Sometimes, you think of space as just defense and governmental, but there's obviously much, much more going on commercially in space all the time, and launch costs have come down dramatically," Hobby said. "We think that the demand curve is real and the use cases will continue to expand."
Hobby said that "it's a real possibility" that Genesis Park could pursue additional deals using blank-check companies in the future.
Once the deal is completed, the combined company will be named Redwire and will continue trading on the New York Stock Exchange. Peter Cannito, chairman and CEO of Redwire, will continue to lead the combined company. The SPAC merger values the combined Redwire at a pro forma enterprise value of $615 million, and the company is projected to generate revenue of $163 million in 2021.
In November 2020, Genesis Park Acquisition Corp. priced an initial public offering at $150 million, consisting of 15 million units priced at $10 each. Previously, the IPO was expected to offer 20 million units at $10 each. After closing the offering on Nov. 27, the IPO generated net proceeds of approximately $166.23 million to Genesis Park Acquisition Corp., according to filings with the U.S. Securities and Exchange Commission.
