Electric car maker Polestar to go public via $20bn Spac deal
Swedish start-up set to be one of most valuable EV groups to list through blank-cheque company
Polestar, a premium Swedish electric vehicle company spun off from Volvo Cars and backed by actor Leonardo DiCaprio, has agreed to go public through a special purpose acquisition company at a $20bn valuation.
The Gothenburg-based company will 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 Cars and its Chinese owner 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 transaction values 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 — such as that of electric truckmaker Nikola — have fallen short of expectations, with companies failing to meet rosy projections set out in presentations to investors. The industry has also drawn attention from US regulators.
Mark Stone, senior managing director of Gores Group, said Polestar was different from other electric vehicle companies that had listed through Spacs because it was already selling vehicles in several countries.
“All the other electric vehicles players are PowerPoints, they’re presentations, they’re visions, and they require massive capital,” he said. “[Polestar] have everything they need to come to market. They’re actually in the market.”
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.
“We have a very intense period of growth in front of us with three cars in three years coming out,” chief executive Thomas Ingenlath told the Financial Times.
Polestar now had the funds to expand from the 14 markets it is in at present to 30, and there was no need for further fundraising in the near future, he added. The company would focus especially on the Asia-Pacific region, said Ingenlath.
Polestar, which raised $550m from Chinese investors in April, makes its flagship car in Chengdu, China. The company plans to use a factory in 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.