Interview with Matthieu Pigasse, Partner and co-founder of Centerview Partners, co-founder of Mediawan and 2MX Organic
M&A REVIEW EUROPE: In December 2015, you launched Mediawan, continental Europe and France’s very first SPAC. How did this idea come about?
Matthieu Pigasse: Mediawan was born at the crossroad of a financial instrument and a market analysis. Initially an American phenomenon, SPAC are actually not a new financial tool and have already been used for several decades in the United States and in the United Kingdom. I came across this type of instrument for the first time when Xavier Niel, Pierre Bergé and I took control of Le Monde in 2010. One of Le Monde’s competitors, also interested in acquiring the newspaper – the Spanish group Prisa –, had just been acquired by the SPAC created by Liberty, launched by Nicolas Berggruen and Martin Franklin, which was listed on the US market.
Furthermore, our analysis of the audiovisual production market was that it was one of the rare markets where supply and demand were growing strongly in parallel: supply because of the rise of platforms such as Netflix, Apple or Amazon; demand because streaming is a true technological revolution, which made it possible to view content at any time, on any device, from anywhere. Hence the growing need for content to satisfy both supply and demand which led to the creation of Mediawan.
M&A REVIEW EUROPE: Why opt for this financial instrument?
Matthieu Pigasse: SPACs have many advantages. First of all, speed. A SPAC can be set up rapidly and then carry out acquisitions shortly after. This is significantly faster than a traditional IPO. What used to take months or even years can now be done in weeks or even days. The second advantage is flexibility. SPACs enable acquisitions at much higher valuation levels compared to the amounts raised, thanks to the combination of PIPEs (Private Investment in Public Equity), the possibility of paying in shares, and leverage. For example, a SPAC which raised 300 million can look at an acquisition of one or more assets worth over 1 billion. In some cases, this amount can reach or even exceed 2 billion. Finally, the third advantage of a SPAC is the security for investors who will be repaid, should they not be convinced by the investment thesis. This combination of advantages – speed, flexibility and security – were paramount when choosing this instrument.
Looking back at Mediawan results, this instrument enabled us to create a European sector leader while building a consolidation platform in France and in Europe. In just three years, we have created a group with a turnover of EUR 1 billion and nearly 60 acquisitions while retaining talent since young producers have the opportunity to become minority shareholders in the group. Today, Mediawan is one of the two leading audiovisual production houses in Europe.
M&A REVIEW EUROPE: Your sector choices have been radically different from those of the US SPACs focusing on Tech. Can you explain why?
Matthieu Pigasse: We didn’t want to exclude anything based on preconceptions. What interests us is a specific market situation, an investment opportunity. We carried out an analysis of the audiovisual production market in 2015–2016, before deciding to create Mediawan. We had a similar approach with 2MX and are convinced of the investment and development opportunity of the organic food market in Europe today. On the one hand, demand is growing very strongly due to the desire to eat healthier, more balanced, more local food with a greater impact on the environment. On the other hand, and contrary to the United States, the offer is still not very structured in Europe. This led us to launch 2MX with the aim of creating a French and European leader. Demand for organic food is strong and growing exponentially, in a French and European environment lagging behind since the current food distribution and production leaders are not able to fully address this demand.
We are not in a short-term financial logic. Our objective is to create French and European champions and to remain invested for the long term. This is what we did for Mediawan and what we are aiming for with 2MX. We have a long-term industrial approach.
M&A REVIEW EUROPE: Could you explain the choice of your partners for your two SPACs? Is this choice essential to the success of this vehicle?
Matthieu Pigasse: I think the absolute key to success is the team of sponsors, both for the success of the SPAC listing and for its development after the IPO. For each of our SPACs, we have created a close-knit and complementary team of three people, each bringing their own expertise in terms of industrial, financial, managerial and investment track record.
M&A REVIEW EUROPE: What does the name 2MX mean?
Matthieu Pigasse: 2M for Moez and Matthieu and X for Xavier.
M&A REVIEW EUROPE: Today, some sponsors are choosing to reduce the promote. Would you consider this, should you create a third SPAC?
Matthieu Pigasse: There is no general truth in this field. The creation of a SPAC is first and foremost a meeting between supply and demand, between what is offered by sponsors and what the market is willing to accept. Depending on the quality of the project and the team, the conditions can vary. In our case, experience has shown that between Mediawan and 2MX, five years apart, the conditions have not changed.
M&A REVIEW EUROPE: In the absence of hard law on SPACs in France, are there any particular precautions to be taken when creating a SPAC?
Matthieu Pigasse: SPACs are listed entities, therefore stock exchange rules apply. The Euronext regulatory framework also applies. In addition, there are some specific rules which also apply, including that until the IBC (Initial Business Combination) phase the investment in SPACs is solely for professional investors. The bylaws and operating rules of the SPAC are defined in a prospectus approved by the AMF (the French Market Authorities), which is binding for all parties. SPAC investors are therefore protected both by stock market regulations and by the dedicated prospectus.
Furthermore, I don’t understand why some European sponsors choose to list in the US rather than in France. The conditions for listing and managing SPACs are nearly identical in Amsterdam, Paris and New York, with the added benefit of a very welcoming regulatory environment in France, as the AMF demonstrated this again recently with an announcement mid-April 2021.
M&A REVIEW EUROPE: Is the 24-month deadline for finding an acquisition target for the SPAC sufficient?
Matthieu Pigasse: From my point of view, this timeline is necessary and reasonable although somewhat of a constraint. From the moment the SPAC is listed, the countdown begins. When a SPAC is based on an actual project, the investment can be done within 24 months. The execution phase reflects the quality of the sponsors.
M&A REVIEW EUROPE: Can the logic of a SPAC be compared to that of private equity?
Matthieu Pigasse: From my point of view, it is obviously different but complementary. As the term suggests, Private Equity differs from Public Equity. These two tools are aimed at companies with different degrees of maturation and development. Thus, SPACs are better suited to unlisted family-owned companies that have reached a sufficient size and degree of development but are becoming constrained in their development because of their financial requirements. This instrument will allow them to reach a higher stage of development. This explains the success of SPACs, whose number is expected to grow in Europe, where many companies have developed outside the market, for example through venture capital. For these companies, SPACs are one way to tap into the capital market rapidly.
M&A REVIEW EUROPE: Won’t listing in such a short timeframe imply risks for a company?
Matthieu Pigasse: All the usual listing rules apply. Of course, the accounts must comply with regulatory financial standards. Thorough due diligence is carried out by the SPAC and the acquisition is then voted on during a General Meeting. Investors who do not approve can be reimbursed. There is series of safeguarding mechanisms to ensure investors are protected.
M&A REVIEW EUROPE: Would you consider creating a SPAC in the Tech sector?
Matthieu Pigasse: We are interested in particular market situations, investment opportunities. We look at market segments offering consolidation potential.
M&A REVIEW EUROPE: When do you start envisaging potential targets?
Matthieu Pigasse: It starts even before the SPAC is launched. You need to have a very precise and detailed idea of potential targets in the sector you are considering.
M&A REVIEW EUROPE: SPACs are multiplying in the United States. Some of them are looking to Europe to find acquisition targets. What do you think of this situation?
Matthieu Pigasse: An investor is never better than when he is in his sweet spot in terms of experience both in terms of sector and geographically. In my view, a European company is best bought and managed by European investors. We have to be cautious about American SPACs that are looking to De-SPAC by buying European companies.
It is therefore important to encourage the development of European SPACs. The SPAC is an essential instrument for the development of the financial centre of a given country and, consequently, for the development of the economy of a given country. When a SPAC is raised in France, about 2/3 of the amounts raised come from non-French funds. SPACs are therefore a good way to attract foreign investment and contribute to the development of French or European companies and in due course lead to further job creation. There is a lot at stake for our economies. After a strong deployment in the United States, it is time for this instrument to develop in Europe. I am convinced that the number of SPACs will increase in the months and years to come and we should welcome them. I can only applaud the AMF when it encourages the development of SPACs, as it has done, because I believe that this is also a sovereignty issue.
M&A REVIEW EUROPE: Have you ever considered setting up your third SPAC?
Matthieu Pigasse: We are constantly thinking about the future, but it is way too early for now.
Matthieu Pigasse. Before opening the Paris office of Centerview Partners, Matthieu Pigasse most recently served as Deputy CEO of Financial Advisory and Chairman and CEO of Lazard France. Previously, he was Global Head of M&A and Head of Sovereign Advisory. Earlier in his career, he served in the French Treasury and was a counselor to the French Ministry of the Economy, Finances and Industry, as well as chief of staff to French Finance Minister Laurent Fabius. Pigasse is also a successful entrepreneur with interests in the media and a board. Over the course of his career, Pigasse has advised many companies in the CAC 40, the benchmark French stock market index. Pigasse graduated from Sciences Po and the École Nationale d‘Administration.