Just In: Polestar An Electric car company is going public via SPAC
Polestar, a joint venture between Volvo and Geely that makes electric cars, is going public by combining with a special purpose acquisition company, or SPAC. Polestar is the latest electric vehicle — and futuristic transportation — to go public through a reverse merger with a so-called “blank check” company.
Polestar claims it would have a $20 billion “enterprise value” after combining with a business funded by billionaire and “serial SPAC backer” Alec Gores and investment bank Guggenheim Partners. Polestar will also get a large sum of money from the acquisition, including $800 million from Gores Guggenheim’s trust account and $250 million through PIPE financing “anchored by top-tier institutional investors,” according to the business.
According to Polestar, other investors include “Volvo Car Group and associates of Geely Chairman Eric Li,” as well as actor and campaigner Leonardo DiCaprio. Since Lucid Motors’ $24 billion deal in February, it is the largest blank-check merger in the EV business.
In 2016, the firm was set off from Volvo as a performance sub-brand, although it has since rebranded as an all-electric label. Polestar is a joint venture between Volvo and Geely, Volvo’s Chinese parent company.
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With a headquarters in Gothenburg and a production plant in Chengdu, it is genuinely a dual-national automaker. Polestar has only released two vehicles so far: the $155,000 Polestar 1 hybrid coupe and the all-electric Polestar 2 fastback sedan. In late 2021, the Polestar 3, an electric crossover SUV, is slated to be unveiled.
What Is A Spac?
A special purpose acquisition company (SPAC) is essentially a cash reserve set aside for a merger that has gone through the IPO process. The SPAC’s sole purpose is to identify a private company with whom to combine. When this occurs, the target firm effectively goes public without some of the drawbacks associated with traditional IPOs.
SPAC activity has been much higher than usual recently, with the Wall Street Journal declaring 2020 to be a record year for SPACs. Virgin Atlantic, Opendoor, Lordstown Motors, and Fisker are just a few of the companies that have gone through the process. See our SPAC explainer for a more complete explanation of how SPACS vary from IPOs.
In 2016, the firm was set off from Volvo as a performance sub-brand, although it has since rebranded as an all-electric label. Polestar is a joint venture between Volvo and Geely, Volvo’s Chinese parent company. With a headquarters in Gothenburg and a production plant in Chengdu, it is genuinely a dual-national automaker. Polestar has only released two vehicles so far: the $155,000 Polestar 1 hybrid coupe and the all-electric Polestar 2 fastback sedan. In late 2021, the Polestar 3, an electric crossover SUV, is slated to be unveiled.
Polestar joins Faraday Future, Lordstown Motors, and Lucid Motors as the fourth EV startup to go public through SPAC. Polestar, on the other hand, is different from such companies in that it has actually sold vehicles to customers. The company is the latest in a long series of electric car startups, autonomous vehicle companies, and automotive suppliers to go public by combining with publicly-traded investment vehicles known as “blank check” corporations.
There have been a few notable failures. Lordstown, Canoo, and Nikola are just a few of the electric vehicle firms that have met some roadblocks since going public. It appears that in their haste to capitalize on the SPAC boom, these businesses have been left to deal with the demands of being listed on a major stock exchange.
Polestar, on the other hand, may have an easier time because of its ties to large automakers like Volvo and Geely. According to the company, it delivered 10,000 vehicles last year and hopes to sell 290,000 vehicles per year by 2025, with three more models set to debut by 2024.
Polestar Automotive Holding UK Ltd. will be the combined company’s name after the merger, and it will trade on the Nasdaq stock exchange under the ticker “PSNY.”
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