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SPAC S-1 FILINGS: LAST WEEK Data source: SPAC Research
SPAC Ticker Filed IPO Size, $M IPO Unit Focus Sponsor(s) Filing Date Empower Ltd. EMPW.U 250 S+W/3 Consumer, US MidOcean Partners 18-Sep FirstMark Horizon Acquisition Corp. FMAC.U 300 S+W/3 Technology, US FirstMark Capital 18-Sep Social Capital Hedosophia Holdings Corp. VI IPOF.U 1,000 S+W/4 Technology, US Social Capital, Hedosophia 18-Sep Social Capital Hedosophia Holdings Corp. V IPOE.U 650 S+W/4 Technology, US Social Capital, Hedosophia 18-Sep Social Capital Hedosophia Holdings Corp. IV IPOD.U 350 S+W/4 Technology, US Social Capital, Hedosophia 18-Sep NextGen Acquisition Corporation NGACU 350 S+W/3 Industrial/ Healthcare, US 1 st time SPAC team 18-Sep Landcadia Holdings III, Inc. LCYU 500 S+W/3 Consumer, US Tilman Fertitta, Landcadia I & II team, Jefferies 17-Sep VG Acquisition Corp. VGAC.U 400 S+W/3 General, US Virgin Group 16-Sep Apollo Strategic Growth Capital APSG.U 750 S+W/3 Natural Resources/Energy, US Apollo 16-Sep SPAC S-1 FILINGS: LAST WEEK (II) 8 Data source: SPAC Research SPAC Ticker Filed IPO Size, $M IPO Unit Focus Sponsor(s) Filing Date Avanti Acquisition Corp. AVAN.U 500 S+W/2 General, Europe NNS Group, Sienna Capital, Groupe Bruxelles Lambert 16-Sep Edoc Acquisition Corp. ADOCU 100 S+W+R Healthcare, US/Asia 1 st time SPAC team 15-Sep Vy Global Growth VYGG.U 500 S+W/4 Technology, US Vy Capital, Moore Capital 15-Sep ION Acquisition Corp 1 Ltd. IACA.U 200 S+W/3 Technology, Israel ION Asset Management, Cowen 15-Sep Distoken Acquisition Corporation DISTU 40 S+W/2+R Technology, Asia 1 st time SPAC team 15-Sep Montes Archimedes Acquisition Corp. MAACU 500 S+W/2 Healthcare, US 1 st time SPAC team 15-Sep Atlantic Street Acquisition Corp ASAQ.U 250 S+W/2 General, US MC Credit Partners, Cowen 14-Sep AEA-Bridges Impact Corp. IMPX.U 400 S+W/2 ESG, US AEA, Bridges 14-Sep Sports Entertainment Acquisition Corp. SEAH.U 350 S+W/2 Sports, US PJT Partners 14-Sep
Kensington Capital Stock Is Still a Buy Before QuantumScape Deal Closes
Things are just getting started for SPAC play Kensington Capital
By Thomas Niel Sep 18, 2020, 1:58 pm EDT Investorplace.com
So far, 2020 has been the year of special purpose acquisition company (SPAC) deals. This is especially true in the electric vehicle (EV) space. And, one of the latest deals to hit the street involves Kensington Capital Acquisition Corp (NYSE:KCAC). The SPAC, or blank-check company, is acquiring privately held QuantumScape. Kensington Capital stock soared on the news. But that’s just the start.
Sure, rallying more than 90% from where it was pre-merger announcement, this SPAC play looks pricey at first glance. Yet, when you dive into its merger partner, it’s clear there’s ample potential for shares to move even higher once the deal closes.
Why? QuantumScape doesn’t build electric vehicles. But, what it does build could be a game-changer for this emerging industry. I’m talking about the company’s solid-state batteries. Also known as SSBs, these batteries offer many advantages to what’s currently being used in electric cars (lithium-ion batteries).
Already partnered with Volkswagen (OTCMKTS:VWAGY) to produce SSBs, it’s already crushing it right out of the gate. And, with subsequent deals, the company’s star will continue to rise.
And so could Kensington Capital stock, which will soon be trading under the QS ticker symbol. In short, don’t split hairs over the recent rally. It’s time to dive into this before it completes the merger.
Kensington Capital Stock, QuantumScape and SSBs
Why do I find this to be such a great opportunity? As I mentioned above, there’s big potential for SSB technology to revolutionize the electric vehicle space. How so? As QuantumScape founder Jagdeep Singh explained to Reuters, the company’s solid state lithium-metal battery “speed[s] up the recharge to 80% capacity in just 15 minutes.” Not only that, SSBs could be a lower-cost, higher power density battery solution for electric cars and trucks.
In short, this is the kind of technology it will take to make EVs more competitive with traditional gasoline-powered vehicles. With this in mind, it’s clear why Volkswagen has invested heavily in the venture. Not only that, German auto supplier Continental AG, as well as Chinese auto giant SAIC have invested in QuantumScape.
Post-deal, the combined company will have more than $1 billion in “dry powder” to commercialize its technology. Granted, “cashing the check” is several years away. The company doesn’t expect to bring its SSBs to market until at least 2025.
Yet, that doesn’t mean Kensington Capital stock, soon to be QuantumScape stock, will sit still for long. Even after its epic rally, shares have plenty more runway. Not just the near-term, but in the long-term as well.
Why the Recent Run-Up Is Just the Start
Investors may have bid up Kensington shares on news of this deal. But, don’t take the recent euphoria to mean the ship’s sailed. Sure, given this company is still in the pre-revenue stage, its current implied valuation ($3.3 billion) looks rich. Even as many other EV startups, which have yet to bring a product to market, trade at much higher valuations.
But, today’s value does not fully price-in the upside potential from the Volkswagen venture. Given it’ll be years before its SSBs start being placed in vehicles, shares have room to head higher as the company makes more progress.
Yet, that’s not the only catalyst in the near and long-term. The potential to sign on additional automakers is another factor that could move the needle. And given the automotive background of Kensington’s SPAC sponsor, this deal offers more than just a means for QuantumScape to go public.
As Kensington CEO Justin Mirro said, “While there’s a lot of other SPACs out there to claim they’re automotive experts maybe for the last 30 days, we’ve been automotive experts for the last 30 years.” Mirro, an automotive engineer turned investment banker, could have the connections needed to lock down more partnership deals.
Whether its progress on its current prospects, or the sign-on of new major customers, there are many potential developments that could help put points into Kensington stock. Simply put, there’s no reason to think shares have topped out just yet.
In short, shares remain a screaming buy, even at today’s prices.
It’s One of the Best EV Opportunities
Kensington Capital stock may have bolted out of the gate on the heels of its deal for QuantumScape. But, don’t think it’s too late to jump into shares. Buying today, even as the stock trades for nearly double its pre-merger price, still means you can get in on the ground floor.
Why? While the company already has secured a deal with a major automaker, more could follow in the coming years.
With SSBs potentially changing the game, Kensington Capital stock is one of the best EV plays out there.
Opendoor to go public by way of Chamath Palihapitiya SPAC
Alex Wilhelm, Natasha Mascarenhas September 15, 2020
Today, Social Capital Hedosophia II, the blank-check company associated with investor Chamath Palihapitiya, announced that it will merge with Opendoor, taking the private real estate startup public in the process.
The transaction comes during a wave of market interest in special purpose acquisition companies, or SPACs, often called blank-check companies. They exist as publicly traded entities in search of a private company to combine with, taking the private entity public without the hassle of an IPO.
In this case, the SPAC Social Capital Hedosophia II is combining with Opendoor, a richly-valued private technology company that operates in the real estate market.
“This is one of many milestones towards our mission and will help us accelerate the path towards building the digital one-stop-shop to move,” Eric Wu, co-founder and CEO of Opendoor said to TechCrunch in a statement. “I am grateful for the continued support from my teammates and shareholders and most thankful for the tens of thousands – and I hope soon to be hundreds of thousands – of families, couples and individuals that trust Opendoor with the largest financial decision of their life.”
Palihapitiya did not immediately respond to requests for comment from TechCrunch via phone and e-mail. His press relations team pointed to a release where the Social Capital founder says that Opendoor embodies the vision of the IPO 2.0 platform (a fancy way to describe SPACs).
Shares of Social Capital Hedosophia II, which trade under the ticker symbol IPOB, were up around 14% in pre-market trading this morning.
According to a notice associated with the transaction, Opendoor will have an enterprise value of $4.8 billion in the deal, including equity value of around $6.2 billion and around $1.5 billion in cash. Social Capital Hedosophia II will provide “up to” $414 million in cash as part of the deal, while a private investment in public equity transaction, or PIPE, will provide another $600 million.
Some $200 million of the $600 million PIPE, or a third, will be funded by investors in the SPAC, with Chamath Palihapitiya himself providing $100 million.
Palihapitiya is not subtle about his plans to use SPACs to pursue his ambitions to be the next Berkshire Hathaway. He famously brought Virgin Galactic to the public markets through a SPAC, which played a role in the $1.7 billion profit that Social Capital made in 2019.
If not acquiring a public through a SPAC, he’s also used personal capital to take majority stakes in businesses. When describing his appetite for acquisitions, he put it curtly to TechCrunch: “I like businesses that build non-obvious data links.”
The rest of the PIPE will be funded by another Palihapitiya group, some private entities like Access Industries, and what a release hyped as “top-tier institutional investors,” including Blackrock and a pension plan.
A total of $1 billion in cash is expected to be provided in the transaction. Notably all the cash will flow to Opendoor itself, with shareholders in the company “rolling 100 percent of their equity into the combined company,” per a notice. Along with the transaction, Adam Bain, former Twitter COO and founder of 01 advisors, will join the board, CNBC reports.
Opendoor last raised $300 million at a $3.5 billion pre-money valuation in March of 2019. Of that, $1.3 billion was in equity with nearly $3 billion in debt financing. Investors in the company include General Atlantic, the SoftBank Vision Fund, NEA, Norwest Venture Partners, GV, GGV Capital, Access Technology Ventures, SV Angel and Fifth Wall Ventures, along with others.
Playboy Enterprises is exploring options to return to the public markets. The company is in talks with investment bankers but nothing is material. The CEO and CIO declined to comment on the rumors. That being said, $BUNY would be a great ticker.
XL Fleet, a Commercial Vehicle Electrification Solutions Leader, to List on NYSE Through Merger With Pivotal Investment Corp.
September 18 2020 Business Wire
XL is a leading provider of electrified powertrain solutions for U.S. and Canadian commercial fleet vehicles built by Ford, Chevrolet, GMC, and Isuzu
Thousands of XL units already on the road and over 130 million miles driven by its more than 200 customers, including FedEx, The Coca-Cola Company, PepsiCo, Verizon, the City of Boston, Seattle Fire Department, Yale University, and Harvard University
XL has strong demand momentum with a $220 million 12-month sales pipeline and forecasted revenue of over $21 million in 2020 and $75 million in 2021
Pro forma implied enterprise value of the combined company of $1 billion; combined company is expected to have approximately $350 million in net cash at closing, which includes an upsized $150 million fully committed PIPE backed by new and existing strategic and institutional investors
All XL shareholders, including Constellation Technology Ventures, and management will retain 100% of their equity in the combined company XL Fleet (“XL” or the “Company”), a leader in vehicle electrification solutions for commercial and municipal fleets, and Pivotal Investment Corporation II (NYSE: PIC) (“Pivotal”), a publicly traded special purpose acquisition company, today announced that they have entered into a definitive merger agreement. Upon closing, the combined company will be named XL Fleet and is expected to remain listed on the New York Stock Exchange under a new ticker symbol, “XL”, with an anticipated implied enterprise value of approximately $1 billion and no material debt expected to be outstanding.
XL is a high-growth industry leader in providing fleet electrification solutions, with proven, proprietary technology and electrified drive systems that work seamlessly across a wide range of vehicle classes and types. XL has become a trusted brand for over 200 of the largest commercial and municipal fleets in North America, with more than 3,200 XL systems deployed and over 130 million miles driven by customers to date. XL’s customer base includes FedEx, The Coca-Cola Company, PepsiCo, Verizon, the City of Boston, Seattle Fire Department, Yale University, and Harvard University, among other blue-chip companies, municipalities, and institutions.
The Company has developed a flexible proprietary electrification powertrain platform that transforms traditional fossil fuel-powered fleet vehicles into hybrid and plug-in hybrid electric vehicles as they are manufactured. XL systems are currently available on a wide variety of Class 2-6 vehicles manufactured by Ford, Chevrolet, GMC, and Isuzu, and the Company is on track to provide its systems in Class 7-8 vehicles in 2022.
In addition to its electric powertrain platform, XL provides real-time data monitoring and analytics, and will expand its “Electrification-as-a Service” solution, which includes power management, charging infrastructure, and onsite power and storage offerings. XL is also developing all electric offerings. The Company’s rapidly deployable technology solutions position it for long-term growth in a total addressable market that is greater than $1 trillion, which incorporates the money spent on energy consumption and vehicle costs for commercial fleets globally.
XL’s management team, with decades of leading energy innovation, automotive, and electric vehicle (“EV”) experience, is led by Chief Executive Officer Dimitri Kazarinoff and Founder & Chief Strategy Officer Tod Hynes. Pivotal Chairman and Chief Executive Officer Jon Ledecky will join the combined company’s Board of Directors upon completion of the transaction, as will Pivotal Directors Kevin Griffin, Chief Executive Officer and Chief Investment Officer of MGG Investment Group, LP, and Sarah Sclarsic, a technology entrepreneur and carbon removal researcher at Massachusetts Institute of Technology.
Mr. Kazarinoff commented, “We believe that this transaction will enable XL Fleet to advance and accelerate the growth of our industry-leading fleet electrification business, including a rapid expansion of our product offerings. With thousands of XL-equipped vehicles already on the road today, we are excited to continue to pave the way for fleets seeking to promote sustainability while improving operational efficiency.”
Mr. Hynes stated, “XL started its journey more than a decade ago, and today we are proud to be a leader in fleet electrification, enabling commercial businesses and municipalities across North America to perform critical work while driving decarbonization. Today’s announcement marks the natural next step in our evolution, and together with Pivotal and support from our extensive strategic investors, we look forward to furthering XL’s leadership position as we continue to help our customers save money, improve driver productivity, and reduce emissions.”
Mr. Ledecky added, “We are pleased that XL Fleet will be merged into Pivotal at an implied valuation that represents a significant discount relative to XL’s closest publicly traded peers. XL Fleet is rapidly expanding its substantial existing customer base today versus its competitors, who are merely promising customers and revenues years from now. XL’s revenues are expected to more than triple in 2021, cementing its status as the leading provider of vehicle electrification solutions for commercial and municipal fleet vehicles.”
Mr. Griffin said, “Pivotal’s focus has always been on partnering with world-class management teams in sectors that have clear and lasting tailwinds. Tod and Dimitri’s vision in hybrid, plug-in, and EV across all commercial fleet classes provided a unique first-mover advantage that sets XL apart from the competition. Moreover, given Pivotal’s ESG focus, we are also particularly excited to work closely with XL as they help reduce emissions, lower total cost of vehicle ownership, and produce reliable solutions for a wide range of uses globally.”
Transaction Overview
The merger values XL at an implied $1 billion pro forma enterprise value and no material debt is expected to be outstanding at closing.
The combined company expects to receive approximately $350 million of proceeds of cash at closing, assuming no redemptions of Pivotal’s existing public stockholders, including an upsized, fully committed $150 million private placement of common stock (the “PIPE Offering”) at $10.00 per share backed by several new and existing strategic and institutional investors. All XL shareholders, including Constellation Technology Ventures, and management are retaining 100% of their equity in the combined company. The funds are expected to be used to scale for core profitability, develop aforementioned new products and services, expand internationally, pay down or prepay debt and for general corporate purposes.
The Pivotal and XL Boards of Directors have unanimously approved the proposed merger and the related transactions, which are expected to be completed in the fourth quarter of 2020, subject to, among other things, the approval by Pivotal’s and XL’s stockholders of the proposed merger and satisfaction or waiver of other customary closing conditions.
Additional information about the proposed business combination, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Pivotal today with the Securities and Exchange Commission and available at www.sec.gov. The investor presentation can also be found on XL’s investor website at www.xlfleet.com/investors and Pivotal’s website at https://www.pivotalic.com.
Investor Conference Call Information
XL and Pivotal will host a joint investor conference call to discuss the proposed transaction today, Friday, September 18, 2020, at 9:00 am ET.
To listen to the prepared remarks via telephone dial 1-877-407-3982 (U.S.) or 1-201-493-6780 (International) and an operator will assist you. A telephone replay will be available at 1-844-512-2921 (U.S.) or 1-412-317-6671 (International), passcode 13710545. The telephone replay will be available through October 2, 2020 at 11:59 pm ET.
Advisors
Canaccord Genuity LLC is acting as financial advisor to XL. BTIG, LLC is acting as financial and capital markets advisor to Pivotal. Cantor Fitzgerald and PJT Partners are also acting as capital markets advisors to Pivotal. BTIG, LLC and PJT Partners acted as placement agents to Pivotal in connection with the PIPE Offering.
Morrison & Foerster LLP and Graubard Miller are acting as legal counsel to Pivotal. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. is acting as legal counsel to XL.
About XL Fleet
XL Fleet is a leading provider of vehicle electrification solutions for commercial and municipal fleets in North America, with more than 130 million miles driven by customers such as The Coca-Cola Company, Verizon, Yale University and the City of Boston. XL’s hybrid and plug-in hybrid electric drive systems can increase fuel economy up to 25-50 percent and reduce carbon dioxide emissions up to 20-33 percent, decreasing operating costs and meeting sustainability goals while enhancing fleet operations. XL's plug-in hybrid electric drive system was named one of TIME magazine's best inventions of 2019.
For additional information, please visit www.xlfleet.com.
About Pivotal Investment Corporation II
Pivotal Investment Corporation II is a blank check company organized for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization, or other similar business combination with one or more businesses or entities. Pivotal is led by Chairman and CEO Jon Ledecky, a seasoned businessman with over 35 years of investment and operational experience. He has executed hundreds of acquisitions across multiple industries and raised over $20 billion in debt and equity. He is also co-owner of the National Hockey League’s New York Islanders franchise since 2014 and a prior owner of the Washington Wizards and the Washington Capitals. Additionally, Kevin Griffin, the Chief Executive Officer and Chief Investment Officer of MGG Investment Group, LP, serves as a Pivotal director and CEO of Pivotal Spac Funding II LLC, Pivotal’s sponsor. MGG is a private investment firm managing long-term committed capital on behalf of leading endowment, foundation, pension, insurance and high net worth investors globally. Over the course of Mr. Griffin’s 20-year career, he has originated and invested over $4 billion across the capital structure of middle market businesses and has also served on numerous boards of directors. For additional information, please visit https://www.pivotalic.com/.
Important Information and Where to Find It
This communication is being made in respect of the proposed merger transaction involving Pivotal and XL. Pivotal intends to file a registration statement on Form S-4 with the Securities and Exchange Commission (the “SEC”), which will include a proxy statement/prospectus of Pivotal, and certain related documents, to be used at the meeting of shareholders to approve the proposed business combination and related matters. INVESTORS AND SECURITY HOLDERS OF PIVOTAL ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, AND ANY AMENDMENTS THERETO AND OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT XL, PIVOTAL AND THE BUSINESS COMBINATION. The definitive proxy statement will be mailed to shareholders of Pivotal as of a record date to be established for voting on the proposed business combination. Investors and security holders will also be able to obtain copies of the registration statement and other documents containing important information about each of the companies once such documents are filed with the SEC, without charge, at the SEC's web site at www.sec.gov.
The information contained on, or that may be accessed through, the websites referenced in this press release is not incorporated by reference into, and is not a part of, this press release.
Participants in the Solicitation
Pivotal, XL and certain of their respective directors and executive officers may be deemed participants in the solicitation of proxies from the shareholders of Pivotal in favor of the approval of the business combination and related matters. Shareholders may obtain more detailed information regarding the names, affiliations and interests of certain of Pivotal’s executive officers and directors in the solicitation by reading Pivotal’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and the proxy statement and other relevant materials filed with the SEC in connection with the business combination when they become available. Information concerning the interests of Pivotal’s participants in the solicitation, which may, in some cases, be different than those of their stockholders generally, will be set forth in the proxy statement relating to the business combination when it becomes available.
IPO market gears up for busiest week since May 2019 — when Uber went public — with 12 deals on tap
Sept. 15, 2020 at 11:08 a.m. ET By Ciara Linnane
Cloud company Snowflake is expected to raise up to $3.08 billion in biggest-ever software IPO and biggest deal of the year so far
The U.S. initial-public-offering market is gearing up for its busiest week since May of 2019, when Uber Technologies Inc. went public, with 12 deals expected to raise $6.8 billion.
The list includes Snowflake, a cloud company that raised its proposed price range by a wide margin early Monday, to $100 to $110 from a prior $75 to $85. The company is planning to offer 28 million shares to raise up to $3.08 billion at a valuation of up to $30.5 billion. That would make it the biggest deal of the year.
“More impressive, it’s the largest software IPO of all time,” according to Bill Smith, chief executive and co-founder of Renaissance Capital, a provider of IPO exchange-traded funds and institutional research.
The deal is more than twice as large as the second biggest software IPO, that of VMware VMW, -2.40% in 2007, said Smith. “As Zoom ZM, +1.21% and [Amazon’s] AWS AMZN, -2.25% have shown, this seismic shift in the tech sector comes down to market and margins,” Smith wrote in commentary.
San Mateo, Calif.–based Snowflake has applied to list on the New York Exchange under the ticker symbol “SNOW.” There are 23 banks underwriting the deal, led by Goldman Sachs and Morgan Stanley. Proceeds are to be used for general corporate purposes, including potential acquisitions.
See also: 2020 is the year of the SPAC — yet traditional IPOs offer better returns, report finds
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The Risks of Rushing a Coronavirus Vaccine Visit our Video Center “We believe in a data connected world where organizations have seamless access to explore, share, and unlock the value of data. To realize this vision, we are pioneering the Data Cloud, an ecosystem where Snowflake customers, partners, and data providers can break down data silos and derive value from rapidly growing data sets in secure, governed, and compliant ways,” the company says in its prospectus.
Snowflake booked a net loss of $171.3 million in the first six months of fiscal 2020 to July 31, after a loss of $177.2 million in the same period a year earlier. But revenue rose to $241.9 million from $104 million.
Read: Fisker is going public: Five things to know about the electric-car maker ahead of its IPO
Snowflake is joined on the IPO calendar by Unity Software Inc., a maker of software for 3-D videogames, that is a direct rival of Epic Games, the creator of “Fortnite,” which is currently in a dispute with Apple Inc. AAPL, -1.59% and Google parent Alphabet Inc. GOOG, -1.66% GOOGL, -1.65%.
Fuel for Investing Smarter Make the smartest investment decisions with access to Barron's in-depth analysis and unrivaled market predictions -- all conveniently accessed on MarketWatch.com. Limited-Time Offer: $12 for 12 Weeks. LEARN MORE MarketWatch on Multiple devices Unity is planning to sell 25 million shares priced at $34 to $42 each, according to its filing with the Securities and Exchange Commission. If underwriters exercise the option for another 3.8 million shares to cover overallotments, Unity would raise up to $1.21 billion. There are 11 banks underwriting the deal, led by Goldman Sachs and Credit Suisse.
See also:Unity Software IPO: 5 things to know about the videogame-engine company
Unity will have up to 267.2 million shares outstanding after the offering, including the overallotments, potentially giving Unity a valuation of $11.06 billion at the high end of its pricing range, which would nearly double the company’s valuation from July 2019 of about $6 billion. The company will have a single class of common stock, but the board reserves the right to issue up to 100 million shares of stock to fight off a hostile takeover.
Read now:A new breed of tech IPOs may give the stock market reason to party like it’s 1999
Unity has applied to list on the New York Stock Exchange, under the ticker symbol “U.” Unity brought in $541.8 million in revenue and a $163.2 million loss in 2019, compared with $380.8 million in revenue for a $131.6 million loss in 2018. Epic’s annual revenue in 2019 was estimated at $4.2 billion, according to Forrester.
Packaging company Pactiv Evergreen PTVE, -21.92% is expected to be the week’s third biggest deal, with plans to offer 41.03 million shares priced at $18 to $21 each. The biggest maker of fresh food and beverage packaging is expected to raise $861 million at a valuation of about $3.4 billion.
The company has applied to list on Nasdaq under the symbol “PTVE.” There are 14 banks underwriting the deal, led by Credit Suisse and Citigroup. Proceeds are slated to be used to repay debt and for general corporate purposes.
Broadstone Net Lease, a Rochester, N.Y., single-tenant commercial net lease real-estate investment trust with 633 properties, is aiming to raise $636.5 million by selling 33.5 million shares priced at $17 to $19 each.
The company plans to list on the NYSE under the symbol “BNL.” There are 10 banks underwriting the deal, led by J.P. Morgan, Goldman Sachs, BMO Capital Markets and Morgan Stanley.
“We are an internally managed REIT that acquires, owns and manages primarily single-tenant commercial real estate properties that are net leased on a long-term basis to a diversified group of tenants,” the company says in its prospectus.
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The company had pro forma loss of $2.9 million in the six months ended June 30, after a loss of $2.29 million in the year-earlier period. Revenue came to $158.6 million, up from $137.5 million.
Amwell AMWL, +28.16%, which offers insurers and patients a telehealth platform, is expected to offer 35 million shares priced at $14 to $16 each, to raise about $560 million, at a valuation of about 3.6 billion. Amwell has applied to list on the NYSE under the ticker “AMWL.”
There are seven banks underwriting the deal, led by Morgan Stanley, Goldman Sachs and Piper Sandler. Proceeds will be used to develop the company’s platform, to invest in AI and automation, to expand the company’s sales force and for potential acquisitions.
The company is loss-making but is going public at a time when telehealth is gaining in popularity during the coronavirus pandemic. Amwell had a net loss of $113.4 million in the first six months of 2020, wider than the $41.6 million loss posted in the year-earlier period. Revenue rose to $122.3 million from $69.1 million.
Rounding out the list:
• Israeli software company JFrog raised the proposed price range for its IPO early Monday to $39 to $41 from a prior $33 to $37. The company FROG, -0.50% is planning to offer 11.6 million shares to raise up to $475.6 million.
The company has applied to list on Nasdaq under the ticker symbol “FROG.” There are nine banks underwriting the deal, led by Morgan Stanley, J.P. Morgan and BofA Securities. Proceeds are to be used for general corporate purposes. “We provide an end-to-end, hybrid, universal DevOps Platform to achieve Continuous Software Release Management, or CSRM,” the company says in its prospectus.
• Sumo Logic, another cloud company, plans to offer 14.8 million shares, priced at $17 to $21 each. The company has applied to list on Nasdaq under the ticker symbol “SUMO.” There are eight banks underwriting the deal, led by Morgan Stanley. Proceeds are to be used for general corporate purposes.
“Sumo Logic is the pioneer of Continuous Intelligence, a new category of software, which enables organizations of all sizes to address the challenges and opportunities presented by digital transformation, modern applications, and cloud computing,” says the company’s prospectus.
• Investment company StepStone Group plans to offer 17.5 million shares, priced at $15 to $17 each. The company has applied to list on Nasdaq under the symbol “STEP.” J.P. Morgan, Goldman Sachs, Morgan Stanley, Barclays and UBS are underwriting the deal. Proceeds are slated to be used to purchase Class B units from its Partnership’s unit holders, and to repay debt. “We are a global private markets investment firm focused on providing customized investment solutions and advisory and data services to our clients,” says the company’s prospectus.
• Vitru Ltd. VTRU, , a Brazilian digital education company, plans to offer 11.23 million shares priced at $22 to $24 each. The company has applied to list on Nasdaq under the ticker symbol “VTRU.” Selling shareholders are selling another 5.2 million shares.
There are nine banks underwriting the deal, led by Goldman Sachs. Proceeds will be used to fund growth through the expansion of the company’s hybrid platform, for acquisitions and other general corporate purposes.
“Our mission is to democratize access to education in Brazil through a digital ecosystem and empower every student to create their own success story,” the company says in its prospectus.
• Dyne Therapeutics, a developer of therapies for muscle diseases, plans to offer 10.3 million shares, priced at $16 to $18 each. The company has applied to list on Nasdaq, under the ticker symbol “DYN.” J.P. Morgan, Jefferies, Piper Sandler and Stifel are underwriting the deal. Proceeds will be used to finance R&D, to develop the company’s proprietary FORCE platform and for general corporate purposes.
“We are building a leading muscle disease company focused on advancing innovative life-transforming therapeutics for patients with genetically driven diseases,” the company says in its prospectus. “We are utilizing our proprietary FORCE platform to overcome the current limitations of muscle tissue delivery and advance modern oligonucleotide therapeutics for muscle diseases.”
• Outset Medical Inc. OM, -3.34%, a medical tech company, plans to offer 7.6 million shares, priced at $22 to $24 each. The company would raise $182.4 million at the top of that range and has applied to list on Nasdaq, under the ticker symbol “OM.” Proceeds of the deal will be used to expand sales and support staff, for R&D and for working capital. There are five banks underwriting the deal, led by BofA Securities, Morgan Stanley and Goldman Sachs.
“Outset is a rapidly growing medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis,” the company says in its prospectus.
• Metacrine Inc., a clinical-stage biotech focused on therapies for patients with liver and gastrointestinal diseases, is planning to offer 6.54 million shares priced at $12 to $14 each. The company would raise about $92 million. Jefferies, Evercore ISI, RBC and Canaccord are underwriting the deal. Proceeds are to be used to fund clinical trials, for working capital and other general corporate purposes. The company has applied to list on Nasdaq under the ticker symbol “MTCR.”
In the last week, nine SPACs, or special purpose acquisition corporations — commonly known as blank-check companies — went public to raise $3.1 billion. The list included one SPAC led by former White House adviser and Goldman Sachs banker Gary Cohn, which raised $720 million.
“Last year that would be worthy of an entire newsletter, but not anymore,” wrote Smith from Renaissance. “We’ll see the full effects of this historic trend in 2021-22 when they start buying companies.
“Based on recent filings, the flood of IPOs will continue. It’s likely we’ll see the busiest September by deal count since 1999. The difference of course, is that these are real businesses,” he wrote.
The Renaissance IPO ETF IPO, -0.42% has gained 56% in 2020, easily outperforming the S&P 500’s SPX, -0.84% 5% gain and the Dow Jones Industrial Average’s DJIA, -0.46% 1.7% decline.
Virgin Group's SPAC VG Acquisition Corp. files for a $400 ...www.renaissancecapital.com › IPO-Center › News › Vir... 3 hours ago - VG Acquisition Corp., a blank check company formed by Virgin Group, filed on Wednesday with the SEC to raise up to $400 million in an initial ...
On July 13 Spartan Energy Acquisition agreed to merge with Fisker. Fisker will make an electric SUV in 2022. According to Barron’s, Fisker expects to make 225,000 electric SUVs a year by 2025.
The reverse merger transaction is at a $2.9 billion enterprise valuation, assuming a $10 price for SPAQ stock. However, the stock has now risen to $12.36, so the new EV is almost 24% higher at $3.6 billion.
By the way, this $2.9 billion valuation number is on the press release. But a related slide presentation says the deal is at pro-forma value of $1.9 billion. So it is not clear which one applies. If the $1.9 billion EV number applies, the present valuation is almost 24% higher at $2.35 billion.
The deal will provide $1 billion to Fisker. The slide presentation implies it is very cheap. For example, the $1.9 EV valuation implies just 0.6 times 2023 estimated sales of $3.3 billion. It also implies just 4.3 times adjusted EBITDA of $441 million in 2023.
Therefore, since SPAQ stock has risen, the new EV-sales ratio is 0.76 times. That assumes a $1.9 billion valuation at the transaction. But if we assume a $2.9 valuation, after the recent stock price increase the ratio is 1.2 times. The same applies to the EV-EBITDA ratios. It is now either 5.6 times or 8.37 times.
The stock could easily double or triple by 2023, possibly much more than that. Again, Tesla stock trades for over 10.8 times historical sales.
Extension Vote Results: CF Finance Acquisition Corp. (CFFA) proxy vote Extension Vote Results: CF Finance Acquisition Corp. (CFFA) SEP 11, 2020 INTEL BY ERIC WEIDEMANN CF FINANCE ACQUISITION CORP. (CFFA) CF Finance Acquisition Corp. (CFFA), filed an 8-K this afternoon detailing the results of yesterday’s shareholder vote to extend their completion deadline from September 17, 2020 to December 17, 2020. The extension amendment was approved by a wide margin and CFFA will not be making any contribution to trust going To access this post, you must purchase 1-Login: Monthly Plan, 1 - Login: Annual Payment Plan (1-Month Free = $160/mo), 3-Logins: Monthly Plan or 3-Logins: Annual Payment Plan (1-Month Free = $367/mo). proxy vote
Extension Vote Results: Insurance Acquisition Corp. (INSU) SEP 11, 2020 INTEL BY ERIC WEIDEMANN INSURANCE ACQUISITION CORP. (INSU) Insurance Acquisition Corp. (INSU), filed an 8-K this afternoon detailing the results of yesterday’s shareholder vote to extend their completion deadline from September 22, 2020 to November 3, 2020. The extension deadline was approved, but more importantly, zero shares redeemed. Out of a total of 16,158,121 shares, only 106,298 voted against the To access this post, you must purchase 1-Login: Monthly Plan, 1 - Login: Annual Payment Plan (1-Month Free = $160/mo), 3-Logins: Monthly Plan or 3-Logins: Annual Payment Plan (1-Month Free = $367/mo).
SPAC pricing
Broadstone Acquisition Corp. (BSN.U) Prices $300M IPO SEP 11, 2020 INTEL BY NICHOLAS ALAN CLAYTON Broadstone Acquisition Corp. announced the pricing of its $300 million IPO this morning and the units are expected to begin trading on the NYSE under the symbol “BSN.U” today, Friday, September 11th. ...READ MORE
ipo3 TWC Tech Holdings II Corp. (TWCTU) Prices $525M IPO SEP 10, 2020 INTEL BY NICHOLAS ALAN CLAYTON TWC Tech Holdings II Corp. announced the pricing of its $525 million IPO this evening and its units are expected to begin trading on the Nasdaq under the symbol “TWCTU” tomorrow, Friday, September 11th. ...READ MORE
SPAC pricing Tortoise Acquisition Corp. II (SNPR.U) Prices Upsized $300M IPO SEP 10, 2020 INTEL BY NICHOLAS ALAN CLAYTON Tortoise Acquisition Corp. II announced the pricing of its $300 million IPO tonight and the units are expected to begin trading on the NYSE under the symbol “SNPR.U” tomorrow, Friday, September 11th. ...READ MORE
Executive Network Partnering (ENPC) Seeks to Limit Public Warrant Ownership SEP 10, 2020 INTEL BY ERIC WEIDEMANN Another layer of the Executive Network Partnering Corporation (ENPC.U) prospectus, which investors may not have noticed previously, is found in the back of the book where many notable new deal terms often reside (in the “Description of Securities” section). This one is regarding warrant ownership limitations. It is quite common to see a limitation on To access this post, you must purchase 1-Login: Monthly Plan, 1 - Login: Annual Payment Plan (1-Month Free = $160/mo), 3-Logins: Monthly Plan or 3-Logins: Annual Payment Plan (1-Month Free = $367/mo). insu-shift-4x6 Insurance Acquisition Corp. & Shift Technologies: Live Presentation and Q&A SEP 10, 2020 INTEL BY KRISTI MARVIN – Live Management Presentation and Q&A
Prime Impact Acquisition I (PIAI.U) Prices $300M IPO SEP 10, 2020 INTEL BY NICHOLAS ALAN CLAYTON Prime Impact Acquisition I announced the pricing of its $300 million IPO this morning and its units are expected to begin trading on the NYSE under the ticker symbol “PIAI.U” today, Thursday, September 10th. ...READ MORE
ipo3 Starboard Value Acquisition Corp. (SVACU) Prices Upsized $360M IPO SEP 10, 2020 INTEL BY KRISTI MARVIN Starboard Value Acquisition Corp. announced the pricing of its upsized $360 million IPO this morning and its units are expected to begin trading on the Nasdaq under the ticker symbol “SVACU” today, Thursday, September 10th. ...READ MORE
SPAC pricing NavSight Holdings Inc. (NSH.U) Prices $200M IPO SEP 9, 2020 INTEL BY NICHOLAS ALAN CLAYTON NavSight Holdings Inc. announced the pricing of its $200 million IPO tonight and the units are expected to begin trading on the NYSE under the symbol “NSH.U” tomorrow, Thursday, September 10th. ...READ MORE
ARKO GPM-Investments2 Haymaker Acquisition Corp. II (HYAC) to Combine with ARKO Holdings SEP 9, 2020 INTEL BY NICHOLAS ALAN CLAYTON Haymaker Acquisition Corp. II (HYAC) announced this morning it has entered into a definitive agreement to combine with ARKO Holdings Ltd. (TASE: ARKO), an Israeli company whose primary asset is convenience store chain GPM Investments. Richmond, Virginia-based GPM is the 7th largest convenience store chain in the United States with 1,393 stores across 23 US
IPO-Pricing
Cohn Robbins Holdings Corp. (CRHC.U) Prices Upsized $720M IPO SEP 8, 2020 INTEL BY NICHOLAS ALAN CLAYTON Cohn Robbins Holdings Corp. announced the pricing of its upsized $720 million IPO this evening and the units are expected to begin trading on the NYSE under the symbol “CRHC.U” tomorrow, Wednesday, September 9th. ...READ MORE
IPO Industrial Tech Acquisitions, Inc. (ITACU) Prices $75M IPO SEP 8, 2020 INTEL BY NICHOLAS ALAN CLAYTON Industrial Tech Acquisitions Inc. announced the pricing of its $75 million IPO tonight and the units are expected to begin trading on the Nasdaq under the symbol “ITACU” tomorrow, Wednesday, September 9th. ...READ MORE
AerSale Monocle Acquisition Corp. (MNCL) and AerSale Revise Deal Terms SEP 8, 2020 INTEL BY ERIC WEIDEMANN Monocle Acquisition Corporation (MNCL), filed an 8-K Tuesday evening announcing a revised Merger Agreement with AerSale Corp. Specifically, Monocle has adjusted the Enterprise Value to $300 million, representing a new multiple of 5.5x 2021E EBITDA, down from an Enterprise Value of $430 million and 6.3x 2020E EBITDA. This deal has been substantially restructured to reflect
Eos-Energy-Storage-Logo B. Riley Principal Merger Corp. II to Combine with Eos Energy Storage SEP 8, 2020 INTEL BY MATT CIANCI This morning B. Riley Principal Merger Corp. II (BMRG) entered into a definitive agreement to merge with Eos Energy Storage at an initial enterprise value of $550M. This is the second deal for the B. Riley team led by Daniel Shribman & Kenneth Young and we can’t say we are too surprised in how this consummated
Dear Stockholders of Spartan Energy Acquisition Corp
You are cordially invited to attend the special meeting (the “special meeting”) of stockholders of Spartan Energy Acquisition Corp. (“Spartan,” “we,” “our,” “us” or the “Company”), which will be held at local time, on , 2020, via live webcast at the following address: . At the special meeting, Spartan stockholders will be asked to consider and vote upon the following proposals:
The Business Combination Proposal—To consider and vote upon a proposal to (a) approve and adopt the Business Combination Agreement and Plan of Reorganization, dated as of July 10, 2020 (the “Business Combination Agreement”), among Spartan, Spartan Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Spartan (“Merger Sub”), and Fisker Inc., a Delaware corporation (“Fisker”), pursuant to which Merger Sub will merge with and into Fisker, with Fisker surviving the merger as a wholly owned subsidiary of Spartan and (b) approve such merger and the other transactions contemplated by the Business Combination Agreement (the “business combination” and such proposal, the “Business Combination Proposal”) (Proposal No. 1). A copy of the Business Combination Agreement is attached to this proxy statement as Annex A.
The Charter Proposals—To consider and vote upon each of the following proposals to amend Spartan’s amended and restated certificate of incorporation (the “Charter”) (collectively, the “Charter Proposals”):
The Authorized Share Charter Proposal—To (a) increase the number of authorized shares of Spartan’s Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”), from 200,000,000 shares to 750,000,000 shares, (b) increase the number of authorized shares of Spartan’s Class B Common Stock, par value $0.0001 per share (the “Class B Common Stock”), from 20,000,000 shares to 150,000,000 shares, and (c) increase the number of authorized shares of Spartan’s Preferred Stock, par value $0.0001 per share, from 1,000,000 shares to 15,000,000 shares (the “Authorized Share Charter Proposal”)
Direct Listings: An evolving pathway to the public capital markets.
Direct listings have increasingly been gaining attention as a means for a private company to go public. A direct listing refers to the listing of a privately held company’s stock for trading on a national stock exchange (either the NYSE or Nasdaq) without conducting an underwritten offering, spin-off or transfer quotation from another regulated stock exchange. Under current stock exchange rules, direct listings involve the registration of a secondary offering of a company’s shares on a registration statement on Form S-1 or other applicable registration form filed with, and declared effective by, the Securities and Exchange Commission, or the SEC.[1] Existing shareholders, such as employees and early-stage investors, whose shares are registered for resale are able to sell their shares on the applicable exchange, but are not obligated to do so, providing flexibility and value to such shareholders by creating a public market and liquidity for the company’s stock. Upon listing of the company’s stock, the company becomes subject to the reporting and governance requirements applicable to publicly traded companies, including periodic reporting requirements under the Securities Exchange Act of 1934, as amended, and governance requirements of the applicable exchange.
Companies may pursue a direct listing to provide liquidity and a broader trading market for its shareholders; however, the listing company can also benefit. Forecasting a direct listing may make the listing company’s equity more attractive to potential investors while the company is still private and provide greater process control to the company as it goes public. For instance, the traditional roadshow has been replaced in some direct listings by an investor day whereby the company invites investors to learn about the company one-to-many, such as via a webcast, which can be considered more democratic as all investors have access to the same educational materials at once. In addition, equity that will be publicly traded can serve as a more attractive acquisition currency, both before and after listing. Most significantly, listing provides a company with optionality to use the public capital markets to raise cash, typically lowering its cost of capital and increasing flexibility in capital planning.
Companies have not raised fresh capital as part of the direct listing process, but the NYSE recently proposed changes to its rules that would allow a primary offering along with, or in lieu of, a direct secondary listing.[2]
Advantages of a direct listing as compared to an IPO.
Immediate Benefits to Existing Shareholders.
All shareholders whose shares are registered on the resale shelf registration statement will have the opportunity to participate in the first day of trading of the company’s stock. Shareholders who choose to sell are able to do so at market trading prices, rather than only at the initial price to the public set in an IPO. The ability to sell at market prices on the first day of a listing can be a significant benefit to existing shareholders who elect to sell. However, this benefit assumes there is sufficient market demand for the shares offered for resale.
Potentially Wider Initial Market Participation.
The traditional IPO process includes a focused set of participants, and institutional buyers tend to feature prominently in the initial allocation of shares to be sold by the underwriting syndicate. In a direct listing, any prospective purchasers of shares are able to place orders with their broker-dealer of choice, at whatever price they believe is appropriate, and such orders become part of the initial reference price-setting process.
Flexibility in Timing of Public Announcement.
IPO marketing has become more flexible since the introduction of rules providing for “testing-the-waters” communications by Emerging Growth Companies and, starting December 3, 2019, all companies.[3] However, a direct listing allows a company to avoid the rigidity of the traditional roadshow conducted for a specified period of time following the publicly announced launch of an IPO and allows it to tailor marketing activities to the specific considerations underlying the direct listing. These marketing efforts may include one or more investor days and a roadshow-like presentation, conducted at times deemed most advantageous (although the applicable registration statement must still be publicly filed for at least 15 days in advance of any such marketing efforts). Although the approximate timing of the direct listing can be inferred from the status of the publicly filed registration statement, the company may have more flexibility as to the day its shares commence trading on the applicable stock exchange.
Brand Visibility.
As direct listings are still a novel concept in U.S. capital markets, any direct listing with moderate success will likely draw broad interest from market participants and relevant media. This effect is multiplied when the listing company has a well-recognized brand name.
No Underwriting Fees.
A direct listing can save money by allowing companies to avoid underwriting discounts and commissions on the shares sold in the IPO. However, the company will still incur significant fees to market makers or specialists, as applicable, independent valuation agents, auditors, legal counsel, and a financial advisor.
No Lock-up Agreements.
Existing management and significant shareholders are not typically subject to the restrictions imposed by 180-day lock-up agreements standard in IPOs. Notwithstanding, as practice evolves, investors may expect certain key players will be subject to lock-up arrangements, as was the case with Spotify’s largest non-management shareholder.
Certain issues to consider before choosing a direct listing.
Establishing a Price Range and Initial Reference Price.
No marketing efforts are permissible without a compliant preliminary prospectus on file with the SEC, and such prospectus must include an estimated price range. In a traditional IPO, the cover page of the preliminary prospectus contains a price range of the anticipated initial sale price of the shares. In a direct listing, the current market practice is to describe how the initial reference price is derived (e.g., by buy and sell orders collected by the applicable exchange from various broker-dealers). These buy and sell orders have in the past been largely determined with reference to high and low sales prices per share in recent private transactions of the subject company. In cases where a company does not have such transactions to reference, additional information will be necessary to educate and assist investors and help establish an initial bid price. In addition, the listing company may elect to increase the period between the effectiveness of its registration statement and its first day of trading, thereby allowing time for additional buy and sell orders to be placed. The financial advisor to the company will play an important role in this process, as discussed below.
Financial Advisors and their Independence.
The rules of both the NYSE and Nasdaq require that the listing company appoint a financial advisor to provide an independent valuation of the listing company’s “publicly held” shares and, in practice, assist the applicable exchange’s market maker or specialists, as applicable, in setting a reference price. In past direct listings, in particular those involving the NYSE, the financial advisor that served this role was not the financial advisor the listing company engaged to advise generally, including to assist the company define objectives for the listing, position the equity story of the company, advise on the registration statement, and assist in preparing presentations and other public communications. As reviewed in detail below, the financial advisor that values the “publicly held” shares and assists the applicable exchange’s market maker or specialists, as applicable, must be independent, which under the relevant rules disqualifies any broker-dealer that has provided investment banking services to the listing company within the 12 months preceding the date of the valuation.
Shares to be Registered.
In a direct listing, a company generally registers for resale all of its outstanding common equity which cannot then be sold pursuant to an applicable exemption from registration (such as Rule 144), including those subject to registration rights obligations. The company may register shares held by affiliates and non-affiliates who have held the shares for less than one year or otherwise did not meet the requirements for transactions without restriction under Rule 144.[4] Companies may also register shares held by employees to address any regulatory concerns that resales of shares by employees occurring around the time of the direct listing may not have been entitled to an exemption from registration under the Securities Act. All shares subject to registration may be freely resold pursuant to the registration statement only as long as the registration statement remains effective and current. The company will typically bear the related costs.
Direct Listing-specific Risks.
Traditional IPOs offer certain advantages that are not currently present in direct listings. Going public without the structure of an IPO process is not without risk, such as the need to obtain research coverage in the absence of an underwriting syndicate that has research analysts or the need to educate investors on the company’s business model. Any company considering a direct listing should contemplate whether its investor relations apparatus is capable of playing an outsized role in coordinating marketing efforts and outreach to potential investors. Notably, in a direct listing, the listing company’s management plays no role in setting the initial reference price, and certain market-making activities conducted by the underwriting syndicate may be unavailable. This may present unacceptable risks for companies that may otherwise be poised to undertake a direct listing.
The NYSE and Nasdaq rules applicable to a direct listing.
Background
The direct listing rules of both the NYSE[5] and Nasdaq Global Select Market[6] are substantially similar and are structured as an exception to each exchange’s requirement concerning the aggregate market value of the company to be listed. Prior to the direct listing rules, companies that did not previously have their common equity registered under the Exchange Act were required to show an aggregate market value of “publicly held” shares in excess of $100 million ($110 million for Nasdaq Global Select Market, under certain circumstances), such market value being established by both an independent third-party valuation and recent trading prices in a trading market for unregistered securities (commonly referred to as the Private Placement Market).
“Publicly held” shares include those held by persons other than directors, officers and presumed affiliates (shareholders holding in excess of 10%). The Private Placement Market includes trading platforms operated by any national securities exchange or registered broker-dealers. Generally, in a direct listing, the relevant company either (i) does not have its shares traded on a Private Placement Market prior its listing or (ii) underlying trading in the Private Placement Market is not sufficient to provide a reasonable basis for reaching conclusions about a company’s trading price.
Recent Expansion of Markets
On August 15, 2019, Nasdaq submitted to the SEC proposed rule changes related to direct listings on the Nasdaq Global Market and Nasdaq Capital Market, the second- and third-tier Nasdaq markets, respectively.[7] On December 3, 2019, subsequent to an amendment of its proposal by Nasdaq filed on November 26, 2019, the SEC approved Nasdaq’s proposed rule changes.[8] The effect of the rule changes is that if the company to be listed does not have recent sustained trading activity in a Private Placement Market, and thereby must rely on an independent third-party valuation consistent with the rules described above, such calculation must reflect a (i) tentative initial bid price, (ii) market value of listed securities and (iii) market value of publicly held shares that each exceed 200 percent of the otherwise applicable requirements.
Requirements for a Direct Listing
The direct listing rules discussed above were intended to provide relief for privately-held “unicorns,” or companies that are otherwise sufficiently capitalized and which do not need to raise money. Each exchange’s listing standards applicable to direct listings by U.S. companies are summarized, by relevant exchange, in the table that follows:
OVERVIEW OF LISTING STANDARDS APPLICABLE TO DIRECT LISTINGS
NYSE
NASDAQ GLOBAL SELECT MARKET
NASDAQ GLOBAL MARKET
NASDAQ CAPITAL MARKET
Market Value of Publicly Held Shares (i.e., held by persons other than directors, officers and presumed affiliates)
The listing company must have a recent valuation from an independent third party indicating at least $250 million in aggregate market value of publicly held shares. (Rule 102.01A(E))[9]
The listing company must have a recent valuation from an independent third party indicating at least $250 million in aggregate market value of publicly held shares. (Rule IM-5315-1(b))[9]
The listing company must have a recent valuation[10] from an independent third party indicating in excess of $16 million to $40 million in aggregate market value of publicly held shares, depending on the financial standard met below. (Rule 5405)
The listing company must have a recent valuation10 from an independent third party indicating in excess of $10 million to $30 million in aggregate market value of publicly held shares, depending on the financial standard met below. (Rule 5505)
Financial Standards The listing company is required to meet one of the following applicable financial standards:
(i) Each of (a) aggregate adjusted pre-tax income for the last three fiscal years in excess of $10 million, (b) with at least $2 million in each of the two most recent fiscal years and (c) positive income in each of the last three fiscal years (the “NYSE Earnings Test”).
(ii) Global market capitalization of $200 million (the “Global Market Capitalization Test”).
The listing company is required to meet one of the following applicable financial standards:
(i) Each of (a) aggregate adjusted pre-tax income for the last three fiscal years in excess of $11 million, (b) with at least $2.2 million in each of the two most recent fiscal years and (c) positive income in each of the last three fiscal years (the “Nasdaq Earnings Standard”).
(ii) Each of (a) average market capitalization in excess of $550 million over the prior 12 months, (b) $110 million in revenue for the previous fiscal year and (c) aggregate cash flows for the last three fiscal years in excess of $27.5 million and positive cash flows for each of the last three fiscal years (the “Capitalization with Cash Flow Standard”).
(iii) Each of (a) average market capitalization in excess of $850 million over the prior 12 months and (b) $90 million in revenue for the previous fiscal year (the “Capitalization with Revenue Standard”).
(iv) Each of (a) market capitalization in excess of $160 million, (b) total assets in excess of $80 million, and (c) stockholders’ equity in excess of $55 million (the “Assets with Equity Standard”).
The listing company is required to meet one of the following applicable financial standards:
(i) Each of (a) aggregate adjusted pre-tax income in excess of $1 million in the latest fiscal year or in two of the last three fiscal years and (b) Stockholders’ equity in excess of $15 million.
(ii) Each of (a) Stockholders’ equity in excess of $30 million and (b) two years of operating history.
(iii) Market value of listed securities in excess of $150 million.
(iv) Total assets and total revenue in excess of $75 million in the latest fiscal year or in two of the last three fiscal years.
The listing company is required to meet one of the following applicable financial standards:
(i) Each of (a) Stockholders’ equity in excess of $15 million and (b) two years of operating history.
(ii) Each of (a) Stockholders’ equity in excess of $4 million and (b) market value of listed securities in excess of $100 million.
(iii) Total assets and total revenue in excess of $75 million in the latest fiscal year or in two of the last three fiscal years.
Distribution Standards
The listing company must meet all of the following distribution standards:
(i) 400 round lot shareholders;
(ii) 1.1 million publicly held shares; and
(iii) Minimum initial reference price of $4.00.
The listing company must meet all of the following liquidity requirements:
(i) 450 round lot shareholders or 2,200 total shareholders;
(ii) 1.25 million publicly held shares; and
(iii) Minimum initial reference price of $4.00.
The listing company must meet all of the following distribution standards:
(i) 400 round lot shareholders;
(ii) 1.1 million publicly held shares; and
(iii) Minimum initial reference price of $8.00.
The listing company must meet all of the following liquidity requirements:
(i) 300 round lot shareholders;
(ii) 1 million publicly held shares; and
(iii) Minimum initial reference price of $8.00.
Engagement of Financial Advisor
Any valuation used in connection with a direct listing must be provided by an entity that has significant experience and demonstrable competence in the provision of such valuations. (Rule 102.01A(E))
A valuation agent will not be deemed to be independent if (Rule 102.01A(E)):
(i) At the time it provides such valuation, the valuation agent or any affiliated person or persons beneficially own in the aggregate, as of the date of the valuation, more than 5% of the class of securities to be listed, including any right to receive any such securities exercisable within 60 days.
(ii) The valuation agent or any affiliated entity has provided any investment banking services to the listing applicant within the 12 months preceding the date of the valuation. For purposes of this provision, “investment banking services” includes, without limitation, acting as an underwriter in an offering for the issuer; acting as a financial adviser in a merger or acquisition; providing venture capital, equity lines of credit, PIPEs (private investment, public equity transactions), or similar investments; serving as placement agent for the issuer; or acting as a member of a selling group in a securities underwriting.
(iii) The valuation agent or any affiliated entity has been engaged to provide investment banking services to the listing applicant in connection with the proposed listing or any related financings or other related transactions.
Any valuation used in connection with a direct listing must be provided by an entity that has significant experience and demonstrable competence in the provision of such valuations. (Rule IM-5315-1(e))
A valuation agent shall not be considered independent if (Rule IM-5315-1(f)):
(i) At the time it provides such valuation, the valuation agent or any affiliated person or persons beneficially own in the aggregate, as of the date of the valuation, more than 5% of the class of securities to be listed, including any right to receive any such securities exercisable within 60 days.
(ii) The valuation agent or any affiliated entity has provided any investment banking services to the listing applicant within the 12 months preceding the date of the valuation. For purposes of this provision, “investment banking services” includes, without limitation, acting as an underwriter in an offering for the issuer; acting as a financial adviser in a merger or acquisition; providing venture capital, equity lines of credit, PIPEs (private investment, public equity transactions), or similar investments; serving as placement agent for the issuer; or acting as a member of a selling group in a securities underwriting.
(iii) The valuation agent or any affiliated entity has been engaged to provide investment banking services to the listing applicant in connection with the proposed listing or any related financings or other related transactions.
Same as the Nasdaq Global Select Market
Upon satisfaction of the above requirements of the applicable exchange, the exchange will generally file a certification with the SEC, confirming that its requirements have been met by the listing company. After such filing, the company’s registration statement may be declared effective by the SEC (assuming the SEC review has run its course). In practice, the SEC has reviewed registration statements that contemplate a direct listing in substantially the same manner it reviews traditional IPO registration statements, with some additional focus on process as direct listing practice and the related rules evolve. After the registration statement is declared effective by the SEC, the company becomes subject to the governance requirements of the applicable exchange (subject to compliance periods) and the reporting requirements under the Exchange Act. The company may then establish the day its equity will commence trading in consultation with the applicable exchange, which could be the same day as the SEC declares the registration statement effective, assuming the exchange’s market maker or specialists, as applicable, and the financial advisor appointed by the company are able to determine an initial reference price.
NYSE’s proposed rule changes: Primary capital raise via direct listing
Allowing companies to conduct their initial public offering outside of the traditional IPO format (i.e., an underwritten firm commitment) could potentially revolutionize the way in which companies go public. Historically, companies have not raised fresh capital as part of the direct listing process. On December 12, 2019, the NYSE filed a revised proposal with the SEC that seek to allow companies to publicly raise capital through a direct listing – called a “Primary Direct Floor Listing.” The NYSE’s proposal would allow a company to sell shares on its own behalf, without underwriters, in addition to or in place of a secondary offering by shareholders. .
Under the NYSE’s proposal, companies hoping to conduct a primary offering while listing pursuant to the NYSE’s proposed rules would have been required to either:
sell at least $100 million in the opening auction on the first day of listing, thereby ensuring that there will be at least $100 million in public float after the first trade; or the aggregate market value of publicly held shares immediately prior to listing and the market value of shares sold by the company in the opening auction is at least $250 million. In addition, the NYSE’s proposal would create a new 90-day grace period for a listed company to meet the requirement for 400 round lot shareholders – called a “Distribution Standard Compliance Period.” To benefit from the NYSE’s proposed “Distribution Standard Compliance Period,” a company would have been required to:
conduct a primary offering in which the company sells at least $250 million in market value of shares in the opening auction on the initial listing date; conduct a secondary offering that demonstrates $350 million in market value of publicly held shares; or conduct a primary offering in which the aggregate of the market value of publicly held shares immediately prior to listing and the market value of shares sold by the company in the opening auction is at least $350 million.
Pursuant to Section 19(b)(2) of the Securities Act, the SEC has 45 days to either approve or disapprove the proposed rule change or institute proceedings to determine whether the proposed rule change should be disapproved. The SEC could also extend the 45-day period by an additional 45 days if it determines that a longer period is appropriate and publishes the reasons for such determination, as it did with the recently approved Nasdaq rules.
Nasdaq has not to date introduced a proposed rule change that would allow primary registered offerings concurrently with a direct listing. However, Nasdaq is expected to introduce a similar proposal in order to allow it to best compete with the NYSE as the direct listing practice evolves.
Conclusion
Direct listings are a sign of the times. As U.S. companies raise increasingly large amounts of capital in the private markets, the public capital markets need to provide a wider variety of means for a private company to enter the public capital markets and provide liquidity to existing shareholders. Although direct listings will undoubtedly provide new opportunities for entrepreneurial companies with a well-recognized brand name or easily understood business model, we do not expect direct listings to replace IPOs any time soon. Direct listing practice is evolving and involves new risks and speedbumps. Any company considering an entry to the public capital markets through a direct listing is encouraged to carefully consider the risks and benefits in consultation with counsel and financial advisors. Members of the Gibson Dunn Capital Markets team are available to discuss strategy, options and considerations as the rules and practice concerning direct listings evolve.
Bill Gates-backed vehicle battery supplier to go public through SPAC deal
THU, SEP 3 20209:55 AM EDT Michael Wayland CNBC.COM
QuantumScape, a developer of what are known as solid-state batteries, has entered into a definitive agreement to merge with blank check company Kensington Capital Acquisition Corp (KCAC).
It’s the latest SPAC deal for an automotive company. Shares of electric vehicle company Nikola surges through such a deal in early June. The implied value of the combined company, which will list on the New York Stock Exchange under the ticker QS, is $3.3 billion.
QuantumScape CEO Jagdeep Singh on going public through a SPAC deal An electric vehicle battery supplier backed by Microsoft co-founder Bill Gates and Volkswagen is the newest automotive company to announce plans to go public through a special purpose acquisition company.
QuantumScape, a developer of what are known as solid-state batteries, said Thursday it has entered into a definitive agreement to merge with blank check SPAC Kensington Capital Acquisition Corp. to become a publicly traded company in the fourth quarter.
It’s the latest SPAC deal for an automotive company following electric vehicle company Nikola’s IPO in early June.
Shares of Kensington were up more than 50% during trading Thursday morning to more than $15.
The implied value of the combined company, which will list on the New York Stock Exchange under the ticker QS, is $3.3 billion. QuantumScape is expected to receive more than $1 billion in cash and funding commitments, led by Volkswagen and Qatar’s sovereign wealth fund, as part of the transaction.
In 2018, Volkswagen and QuantumScape announced the formation of a joint manufacturing venture to prepare for the mass production of solid-state batteries.
Prices of electric vehicle batteries have fallen 80% this decade: CEO Many believe the batteries are the next best power source for future electric vehicles. Compared with today’s lithium-ion batteries, solid-state batteries charge quicker and have a greater energy density, meaning vehicles can go farther with the same size battery pack. However, the batteries are extremely costly to produce.
QuantumScape CEO Jagdeep Singh said the company has addressed the “science risks” of solid-state batteries, saying they are capable of faster charging and a range up to double that of batteries today with the same size battery pack.
“We feel like we’re ready to go public now,” he said Thursday on CNBC’s “Squawk Box.” Singh said the investments will fund the company “all the way up to start of production” for the batteries, including at least one factory.
Justin Mirro, chairman and CEO of Kensington, said it was the potential for the technology as well as the company’s progress in developing the batteries that attracted him to the company.
“We’ve done a lot of work on the technology,” he told CNBC. “This is really a revolutionary step in terms of technology.”
Mirro, who will be a board member of the combined company, said his team evaluated hundreds of companies before determining that QuantumScape was “by far” the best to create long-term shareholder value.
Mirro was an automotive engineer for General Motors and Toyota Motor before becoming an investment banker for 20 years. He formed Kensington Capital Partners in 1999.
“While there’s a lot of other SPACs out there to claim they’re automotive experts maybe for the last 30 days, we’ve been automotive experts for the last 30 years,” Mirro said.
Singh said the company’s automotive expertise attracted QuantumScape to do the SPAC deal.
Other investors in QuantumScape include German auto supplier Continental, Chinese automaker SAIC Motor and several venture capitalist firms, according to the company’s website
IPO Initial Public Offering APO Alternative Public Offering DPO Direct Public Offering SPAC Special Purpose Acquisition Company (blank check) Dutch Auction (U.S. Treasury uses this to sell its securities) Reverse Merger (reverse takeover or reverse IPO)
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