SPAC buys Kennedy Wilson

Prospect Acquisition Corp, a $248m blank cheque company, has acquired the Beverly Hills-based investment firm for an undisclosed sum. The Kennedy Wilson name and fund platform will remain, but as a ‘wholly-owned subsidiary of Prospect’.

Kennedy Wilson has been bought by Prospect Acquisition Corp., a special purpose acquisition vehicle (SPAC) created by David Minella.

No financial details were disclosed, but the Beverly Hills-based real estate investment firm said in a statement it would continue as the “surviving entity in the merger and as a wholly-owned subsidiary of Prospect.” Prospect and Kennedy Wilson were unavailable for comment at press time.

The deal is expected to close by 14 November, the date by which the blank cheque company has to have acquired a target business, or face dissolution.

This merger will allow us to significantly enhance our resources, capabilities and momentum in the real estate investment management space.

William McMorrow, Kennedy Wilson chairman and CEO

According to regulatory filings, Prospect raised $245 million in its IPO in November 2007 with the intention of using “substantially all of the net proceeds … to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the business combination”. Twenty-two months after its original IPO, Prospect now has $248 million in capital.

In the statement, Kennedy Wilson said the deal would allow it to take advantage of the distressed real estate markets in the US, particularly in the Californian residential and condo sector. Prospect founder Minella added Kennedy Wilson would now have the cash to “expand its market presence and aggressively pursue deal opportunities in its burgeoning pipeline.”

Under the terms of the acquisition, Kennedy Wilson and a Prospect subsidiary will merge, with the Kennedy Wilson name remaining in tact. Prospect is issuing 26 million shares of common stock to Kennedy Wilson shareholders, and 4 million of restricted Prospect stock to Kennedy Wilson senior managers, which will vest over a three-year period.

“This merger will allow us to significantly enhance our resources, capabilities and momentum in the real estate investment management space,” said William McMorrow, Kennedy Wilson chairman and chief executive officer.

Before launching Prospect and his own advisory firm Minella Capital Management in 2006, Minella was the chief executive officer of asset management acquisition vehicle, Value Asset Management. VAM has acquired and exited controlling investments in five management firms, including Dalton Hartman Greiner and Maher; Harris Bretall Sullivan and Smith; Hillview Capital Advisors; Grosvenor Capital Management; and MDT Advisers.

In October 2008, PERE revealed that Kennedy Wilson was targeting $1.25 billion for its latest fund, Kennedy Wilson Property Fund III, focusing on commercial and multi-family acquisitions, primarily on the West Coast and in Hawaii, but with the ability to invest 25 percent of the fund in Japan. The firm’s previous vehicle, formed in 2005, raised $150 million.