Sajan Pillai, who built Aliso Viejo-based UST into a tech service giant with a $1 billion-plus valuation, is the latest local executive looking to tap the booming market for special purpose acquisition companies, or SPACs.
Pillai is the chairman and chief executive of a recently formed SPAC called McLaren Technology Acquisition Corp., an offshoot of a locally based investment firm that he leads.
The Irvine-based SPAC, upon going public itself, aims to find a privately held business in the banking, financial services or insurance sectors and take it public via a reverse merger.
The blank-check firm filed plans earlier this month to raise $200 million in an initial public offering; Pillai will own 20% of the SPAC after it goes public at a price of $10 a share, regulatory filings indicate.
The company is looking to buy a finance-related company that leverages emerging technologies like artificial intelligence, machine learning, or fintech after it goes public, the company’s IPO paperwork indicates.
Those sectors are “where our management team has extensive experience,” the prospectus notes. Potential acquisition targets have not been made yet, the blank-check company said.
Global Reach
Pillai co-founded UST Global—now known as UST—in 1999 and became the company’s chief executive in 2008 after previously serving as president and chief operating officer.
During Pillai’s tenure, he helped UST grow from 20 employees to 25,000 employees and reported a compound annual growth rate of over 30% in invested capital for its investors.
UST provides tech services to large corporations, including many Fortune 500 companies in industries like banking, insurance and telecom.
It’s one of OC’s largest privately held tech companies; a 2018 investment from Temasek Holdings Pte. Ltd., Singapore’s state-run investment fund, valued the company at over $1 billion.
The Aliso Viejo firm—which is not involved in the SPAC and is now run by CEO Krishna Sudheendra—has business operations in countries scattered across the globe, including deep ties in India.
The Business Journal reported last month that UST is looking to add another 10,000 to its employee base globally.
New Roles
Pillai stepped down from UST in 2019 to focus on a pair of new investment firms with offices in Irvine: Season Two Ventures and McLaren Strategic Ventures.
Season Two, which has an office in India, invests in early-stage, tech-related B2B firms.
The company’s website lists seven portfolio companies, including Ambee, a Bangalore, India-based provider of real-time information on local air quality, and Cleareye.ai, an AI-focused platform for online banking based in Los Angeles.
News reports indicate that Season Two has upwards of $100 million to invest; with typical investments running a few million dollars each.
McLaren Strategic is a business accelerator helping tech startups and scaleups. Recent deals it has made include the acquisition of Doran Jones, a technology consulting, data engineering and software development firm based in Charlotte, N.C. that specializes in capital markets, risk and regulatory requirements.
Other officials with both McLaren Strategic and Season Two are involved in the sponsorship and management of the newly formed SPAC.
“We believe that our management team’s relationships with leading technology company founders, executives of private and public companies, venture capitalists and private equity partners, in addition to the extensive industry and geographical reach of McLaren Strategic Ventures’ network, will give us a competitive advantage in pursuing a broad range of opportunities globally,” the registration statement said.
SPAC Popularity
SPACs have become an increasingly popular method for private companies to go public without the regulatory scrutiny or lengthy process common with traditional IPOs.
Local firms using the process this year include auto-focused technology company Indie Semiconductor in Aliso Viejo (Nasdaq: INDI), Advantage Solutions Inc. (Nasdaq: ADV) of Irvine, and WM Technology Inc. (Nasdaq: MAPS), the Irvine-based parent of cannabis-focused software company Weedmaps.
Irvine fintech Acorns Grow Inc. is also expected to go public soon, via a reverse merger with SPAC Pioneer Merger Corp. (Nasdaq: PACX), which is affiliated with the hedge funds Falcon Edge Capital and Patriot Global Management.
Numerous local financial companies like McLaren Strategic have also stepped up to be sponsors of SPACs.
Such deals can be highly profitable if a suitable merger candidate is found, given founding sponsors only need to make a small initial investment to get a 20% stake in the blank-check company.
The structure of reverse merger deals allows the investors in the SPAC to keep a stake in the private companies that they complete deals with.
Newport Beach’s Roth Capital Partners has been involved in four SPACs as a co-sponsor over the past year or so; they’ve announced deals to buy a pair of firms, utilities infrastructure-services firm QualTek of Pennsylvania, and plastic recycling firm PureCycle Technologies LLC.
Finance powerhouse Pimco of Newport Beach has also acted as a SPAC sponsor, as has Newport Beach investment firm Tarsadia.
