Trend of EV SPAC merger to go public continues to gain momentum
Acquiring or merging with a Special Purpose Acquisition Company (SPAC) has become a trend to go public without a time-consuming initial public offering (IPO), and the EV sector is no exception to this growing trend.
SPAC is basically blank company with very small capital. The only eye-catching quality of SPACs is that these companies are listed on stock exchange. Such companies start trading after a simple IPO. As the process of IPO is time consuming as well as expensive, many bigger unlisted companies opt to become public entities through reverse merger with a SPAC. The trend took momentum last year.
A lot of EV companies have either already went public through reverse merger with a SPAC are preparing to merger with a SPAC this year.
American EV maker Fisker completed its reverse merger with Spartan Energy Acquisition Corp. on 29th of October last year. Regardless of its name, Spartan Energy had no link with the energy sector. Instead, it was a special purpose acquisition entity that got listed with the sole purpose of merging with a private company.
Phoenix-headquartered Nikola Corp. went public in June 2020, through its merger with a blank-check company called VectoIQ Acquisition Corporation. Now, Nikola is trading on the NASDAQ without offering an IPO.
QuantumScape went public by merging with Kensington Capital Acquisition, a blank-check company that was listed on the New York Stock Exchange (NYSE) with the sole purpose of merging with a private, unlisted entity.
As the trend continues to gain momentum, a number of more EV manufacturers and related companies are expected to go public this year through the SPAC route. EV recharging network firm ChargePoint, for instance, is planning to go public through a $2.4 billion merger with a SPAC called Switchback Energy.
EVgo, a California-headquartered startup, is in the process of merging with a SPAC called Climate Change Crisis Real Impact I Acquisition. The planned reverse merger deal will not only take EVgo public but also provide investors with a n opportunity to come along for the ride.
Motiv Power Systems and Luxury EV maker Lucid Motors are reportedly also pondering the idea of going public through reverse merger deals with some SPACs. Lucid is reportedly in talks with a New York-based SPAC called Churchill Capital Corp., which is led by Wall Street veteran Michael Klein.
Once a private entity joins a SPAC through reverse merger, it automatically becomes a public entity and starts trading, usually under the same name and the same CEO. In short, SPACs provide a shortcut to go public.
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