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By Ben Klayman, Joshua Franklin and Paul Lienert
(Reuters) – Electric advertising truck manufacturer Nikola Corp. from Phoenix, Arizona, has unsuccessfully tried to raise $1 billion in personal markets and has turned to the public in a merger with a so-called corporate blank check to increase needs. fund, said his CFO.
Nikola temporarily grossed a $250 million commitment from lead investor CNH International last summer, however market considerations about the unfoverable valuations of some corporations led to the start-up of an initial takeover bid before VectoIQ Acquisition Corp approached last November, Kim Brady told Reuters this week. .
An agreement with the special goal acquisition company, or SPAC, became a truth when it was able to establish another $525 million with institutional investors such as Fidelity Management and Research Company when the $240 million acquisition was completed, allowing Nikola to secure his fundraising. Goal.Array, he said in a phone interview.
Nikola’s SPAC merger has been a catalyst for the industry, as electric car brands and other new automotive generation companies struggle to save the necessary budget and expand their cars, even as global demand for electric cars is growing slowly, according to interviews with 20 industry leaders.
“When we embarked on our D-Series (fundraising round), we didn’t think a year later we would be a public company, but based on market conditions, we took a turn,” Brady said. “It worked perfectly for us. We ended up in the same place.”
Nikola had thought of the past as an initial public offering in 2021 or even 2022, and without the SPAC agreement, chances are that there will be plans to advance personal products and slow money in the face of the money market freeze caused by the coronavirus pandemic. Brady said.
Nikola’s good fortune (the stock has increased by more than 320% since the deal was announced) has encouraged other start-ups to a SPAC merger to raise much-needed money, as public market investors are looking for returns similar to Tesla’s. However, the trend also worries industry leaders that some of these transactions simply fail, oversombling the industry.
A SPAC is a phantom company that increases the budget through an initial public offering to buy an operating company, two years from now.
THE SPACES FOR RESCUE
“Some of those corporations have been suffering for many years and now they see SPAC as a kind of savior,” Nikola Brady said.
Start-ups EV Fisker Inc and Lordstown Motors Corp have encountered unrest in raising personal budgets before concluding SPAC agreements to make them public, industry officials said.
Lordstown turned to a SPAC when efforts to raise $500 million privately froze as COVID-19 across the United States, Said Lordstown Executive Leader Steve Burns.
“We thought we would do the personal (financing) and then the more traditional IPO, but the COVID guy ruined that,” Burns told Reuters. “He went from a very wonderful interest to everyone pressing the pause still.”
Without his SPAC, Burns would have had to delay plans, adding the launch of the Endurance electric pickup truck next year at the Lordstown plant in Ohio and tracking with trucks and SUVs.
Fisker CEO Henrik Fisker said personal fundraising in the capital-intensive automotive sector is not enough.
“At the end of the day, when it communicates over billions of dollars, you have to move on to government procurement,” he told Reuters last month.
Other electric vehicle corporations contacted through SPAC come with the commissioning of electric delivery trucks Arrival, Lucid Motors, EV ChargePoint Inc, Bollinger Motors, Canoo, Karma Automotive and VIA Motors International Inc, according to industry negotiators and executives.
Lucid, which raised $1 billion from the Saudi public investment fund in 2018 and plans to start production of its first electric vehicle in early 2021, intends to publicize and do so with a SPAC is an option, Chief Executive Peter Rawlinson told Reuters.
Karma’s acting monetary director Leo Lin said the company’s plan had been to go public and that SPAC was an option as it sought to raise at least $300 million. ChargePoint chief executive Pasquale Romano said the company was eventually planning to go to the public, but that its fundraising leaves time to evaluate all options.
VIA responded to a request for comment and the others declined to comment.
Another key thing is that personal investors have faster investments thanks to the ability to temporarily invest with a CAPS, in some cases up to two or 3 months later, industry officials said.
TESLA ENVY
Investors are also making a profit from the boost in the electric vehicle market, industry officials said. While electric cars still account for a small percentage of car sales worldwide, many believe this will replace as they look with envy at the name of the leader in the electric vehicle industry, Tesla, has skyrocketed by more than 500% on the afterlife. Year.
“People are in favor of the next Tesla,” said Tony Posawatz, a former GM executive who led the progression of the plug-in Chevrolet Volt hybrid car and led the former Fisker Automotive. He is now a member of lucid’s Board of Directors.
Electric vehicle companies, in addition to Chinese start-ups Nio Inc and Li Auto Inc., are so popular with investors that some analysts are pressuring U.S. No. 1 automaker General Motors Co to get rid of their developing electric vehicle assets, a concept CEO Mary Barra has rejected.
Other agreements with SPAC come with Velodyne Lidar Inc, the used online car market Shift Technologies Inc and electric truck power train manufacturer Hyliion Inc, and Reuters reported that electric bus manufacturer Proterra Inc is in talks for such an agreement.
CAPCs give capital to these corporations faster than a typical initial public offering, that is, in an industry where the vehicle structure costs billions of dollars, industry officials said.
But corporations act temporarily to deserve it, a SPAC executive said. “It would be up to corporations to go on strike while the iron is hot,” said the executive, who asked not to be identified. “When you have access to capital, take it.”
The personal market is not entirely closed for those with strong partners. Last month, startup Rivian, funded through Amazon.com Inc and Ford Motor Co, raised another $2.5 billion.
Some industry leaders are concerned that simple cash for less evolved start-ups creates unrest when those corporations cannot keep their promises on a temporary basis. Fisker Inc’s SPAC shares were recently affected when the start-up of EV revealed that it would not reach an agreement until the end of July, as expected, to use Volkswagen AG’s EV platform for its vehicles.
“We’re sitting on what I think is a massive bubble. There’s going to be a pop-up bubble,” said an electric vehicle executive who brought the SPAC technique to fundraising and asked to be identified. “This is going to put a cloud in space.”
(Reporting through Ben Klayman and Paul Lienert in Detroit and Joshua Franklin in Boston; edited through Matthew Lewis)