SPACs offer a quicker, easier, more secretive way to take a private company public versus the conventional initial public offering, or IPO. Through a sale to a blank-check entity, a company that wants its shares traded on public markets can get there much faster — typically several months versus up to a year for an IPO — with much less disclosure of its inner workings and the associated red tape.
Once considered a sketchy alternative, in the high-momentum markets of 2020 into 2021, SPACs have become very popular. Last year, $73 billion was raised in SPAC deals, up from $13 billion in 2019, according to Goldman Sachs. For the first time last year, the volume of SPAC deals outpaced that of traditional IPOs, which came in at only $67 billion.
Electric vehicle and related companies are driving a lot of that activity. Fuel cell truck company Nikola, electric car maker Fisker, electric bus company Proterra, electric truck maker Lordstown, electric robotaxi company Canoo and many more have completed or announced SPAC deals.
Read on to learn about two important recent EV SPAC merger announcements — you’ll probably want to keep them on your radar.
EVgo, which owns one of the United States’ biggest electric vehicle charging networks, is following in the footsteps of rival EV charging provider ChargePoint in seeking to become a publicly-traded company via a special purpose acquisition company (SPAC) reverse merger.
In EVgo’s case, its move to public markets will come along with a continuing financial relationship with its current owner — LS Power, one of the country’s biggest power generation, transmission and energy storage investors.
Under the terms of the deal announced Friday, EVgo will merge with Climate Change Crisis Real Impact I Acquisition Corp. (CRIS) in a transaction that will raise about $575 million, and value the company at about $2.6 billion.
The transaction will include a $400 million private investment in public equity (PIPE) anchored by institutional investors including private funds affiliated with Pacific Investment Management Company LLC (PIMCO), a CRIS co-sponsor, as well as funds and accounts managed by BlackRock, Wellington Management, Neuberger Berman Funds and Van Eck Associates Corporation.
At the same time, LS Power and EVgo management, who own 100 percent of EVgo today, will roll all that equity into the transaction and are expected to own about 74 percent of the company when it closes, according to Friday’s announcement.
This offers LS Power a continued stake in what David Nanus, LS Power’s co-head of private equity and EVgo chairman, described in Friday’s announcement as a “crown jewel in our portfolio.”
Lucid Motors was near death and desperate for cash in 2018 when it was handed a lifeline. The savior was Saudi Arabia. The desert kingdom’s sovereign wealth fund invested $1.3 billion in the electric car start-up. Lucid regained full health.
Now, in 2021, the Saudi fund and Lucid’s founders are poised to cash in by taking advantage of the manic market in blank-check shell companies. In a deal that is near completion, according to a source familiar with the negotiations, the company would draw a hefty but as-yet undetermined amount of cash to fund its operations. If the deal goes off without a hitch, Lucid executives and board members — including Chairman Andrew Liveris, a former Dow Chemical chief executive with deep financial ties to Saudi Arabia — would get a shot at a big payday.
“Lucid Motors has always been clear about its intent to go public at some point in order to accelerate the adoption and global availability of Lucid’s exclusive electric vehicle and sustainability technologies,” the company said in an emailed statement. “Currently, our focus continues to be on bringing Lucid Air to production in spring of this year, with the strong support of key investors and our partners at the Public Investment Fund.” Lucid’s luxury Lucid Air automobile is expected to be ready to roll out of the company’s new Arizona factory in coming months. The car’s stylish interior and exterior and its electric-drive innovations have drawn widespread approval.
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