Ropes, S&C add Better’s $7.7 billion SPAC merger to their belts

Ropes & Gray, Sullivan & Cromwell and Baker McKenzie are directing insurance platform Better HoldCo Inc’s plans to go public through a merger with a blank-check company in a deal that values the SoftBank Group Corp-backed financial technology company at $7.7 billion.

Better and Aurora Acquisition Corp, which is backed by investment firm Novator Capital Sponsor Ltd, announced the merger on Tuesday, as historically low mortgage rates amid the COVID-19 pandemic have fueled a boom in the online mortgage industry.

The Ropes & Gray team advising Aurora is led by private equity partner Carl Marcellino from the firm’s New York office.

The transaction marks Ropes & Gray’s ninth blank-check deal this year, according to data from Refinitiv. Combined, these transactions have a valuation amounting to roughly $58.06 billion. The firm ranks sixth among legal advisors on blank-check mergers.

Aurora also tapped Baker McKenzie for guidance on the business combination, with transactional partners Derek Liu and Adam Eastell leading the team from the United States and United Kingdom, respectively. The firm previously steered the blank-check company’s March $220 million initial public offering alongside underwriters’ counsel Davis Polk & Wardwell, filings with the U.S. Securities and Exchange Commission show.

On the other side of the deal, Better adviser Sullivan & Cromwell is following close behind Ropes & Gray, having guided 11 deals this year worth nearly $56.62 billion, according to Refinitiv data.

Liu and Eastell told Reuters in an interview Tuesday that London-based Aurora’s play for a U.S. company was proof that there is international interest in tie-ups with special purpose acquisition companies.

SPACs are listed companies that have no regular business operations but typically find a company to merge with, thereby taking the target company public.

Founded in 2016 and headquartered in New York, Better offers mortgage and insurance products to homeowners through its online platform.

Under the deal terms, SoftBank will invest $1.5 billion, giving Better a pre-money valuation of $6.9 billion.

BofA Securities Inc is the financial advisor to Better, while Barclays Plc advised Aurora.

The transaction is expected to close in the fourth quarter.

Better and Aurora’s tie-up comes after biotech company Ginkgo Bioworks announced a $17.5 billion mega-merger with blank-check firm Soaring Eagle Acquisition Corp earlier in the day.

Dealmaking activity in the blank-check space has rebounded after a lull caused by weak investor appetite and greater regulatory scrutiny.

The SEC is considering new guidance to rein in listed blank-check companies’ growth projections, Reuters has reported. The regulator suggested last month that SPACs treat their warrants as liabilities instead of equity instruments.

Liu told Reuters that the warrants guidance was a “relatively minor roadblock.”

“The market was fairly panicked at the beginning, but I think within the course of a couple of weeks, folks found a solution and are executing the solution, ourselves included,” Liu said.

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