It is possible, though not highly likely, that a newly created special purpose acquisition company could be the way that Rithm Capital takes its NewRez subsidiary public.
An S-1 registration statement for a $200 million initial public offering was filed on Feb. 3 for Rithm Acquisition Corp., a blank check company incorporated in the Cayman Islands.
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Rithm Capital had previously filed a confidential S-1 for a potential IPO of its NewRez mortgage originations and servicing business, immediately sparking speculation that the company may choose this route instead to take the business public — especially given past management comments, according to a report from Bose George of Keefe, Bruyette & Woods. However, that outcome remains unlikely.
"Our expectation is that this vehicle is a way for Rithm to grow out its asset management platform as opposed to taking NewRez public, which could be accomplished through a traditional IPO, in our view," George continued.
George had previously opined that a NewRez IPO
The S-1, while stating Rithm Acquisition primarily will be looking at firms in complementary businesses to Rithm Capital, does not indicate that taking NewRez public is its purpose.
"We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target," the registration statement said.
Rithm Capital CEO, President and Chairman Michael Nierenberg signed the S-1 as Rithm Acquisition's chairman and CEO. Rithm Acquisition Corp Sponsor LLC, an affiliate of Rithm Capital, has already purchased 5.75 million "founder" shares of the SPAC at a total price of $25,000, and has committed to buy 600,000 units of the class A shares at the $10 price in a private placement simultaneous to the IPO.
While the SPAC could target a business combination in any industry, Rithm Acquisition is looking for industries that complement its management team's expertise and Rithm Capital's business lines.
"We, therefore, intend to target the financial services and real estate sectors, which we believe are at a pivotal moment of transformation and will offer compelling investment opportunities for the foreseeable future," the filing said.
That includes finding businesses that occupy the gaps created by banks exiting "traditional lending" due to regulatory and capital requirements.
"Additionally, we expect to see groundbreaking innovation across the financial services sector, as more businesses utilize automated solutions to resolve inefficiencies and compete against peers," according to the S-1. "Thus, we intend to seek business combination opportunities in markets that are likely to profit from this growing adoption of technology, including, but not limited to, fintech, insurance, specialty finance, mortgage lending and asset management."
Rithm Capital, which started life as
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