Special purpose acquisition companies updates
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Polestar, a Swedish electric vehicle company backed by Volvo Group and actor Leonardo DiCaprio, is set to go public through a special purpose acquisition company at a $20bn valuation, according to people familiar with the matter.
The Gothenburg-based company plans to combine with Gores Guggenheim, a Spac backed by billionaire private equity investor Alec Gores and Guggenheim Capital. The deal would rank Polestar, which was founded four years ago by Volvo and Chinese carmaker Geely, as one of the most valuable electric vehicle companies to list through a Spac.
Polestar will receive $800m raised by Gores Guggenheim earlier this year as well as $250m of cash from a private investment in public equity transaction, a fundraising that often accompanies Spac deals, the people said. The transaction is set to value Polestar at three times its projected revenues for 2023.
Electric vehicle start-ups have been among the biggest winners from the boom in blank-cheque companies, as they seek to capitalise on demand for greener transportation and the popularity of Elon Musk’s Tesla.
However, several high-profile listings have fallen short of expectations, with companies failing to meet rosy projections set out in presentations to investors, and the industry has drawn attention from US regulators.
Polestar sold its first vehicle in 2019 and has projected $1.6bn in revenue for 2021. That figure is expected to double next year as it increases production on its flagship vehicle, Polestar 2, and launches its SUV model Polestar 3.
Polestar, which raised $550m from Chinese investors in April, is majority owned by Chinese car manufacturer Geely and its flagship car, a competitor to Tesla’s Model 3, is manufactured in Chengdu. The company has plans to use factories in Belgium and South Carolina to make some of its vehicles as it faces stiff tariffs when exporting to the US.
Gores, who is among the most prolific Spac sponsors in the market, has helped take companies such as United Wholesale Mortgages and Twinkie maker Hostess Brands public. He has also previously ventured into the electric vehicle space, last year agreeing a deal with Luminar Technologies that valued it at $3.4bn. Shares in the company shot up 300 per cent following its listing but have since lost much of those gains.
The Spac market has soured significantly since the heady days of the boom in the first quarter of the year. Investor redemptions have substantially increased in the third quarter and the stock price bump typically seen when deals are announced has largely faded away.