ArcLight-Backed SPAC Connects With E-Bus Maker Proterra
The private-equity firm’s blank-check company has agreed to combine with the electric vehicle maker at a $1.6 billion valuation
A blank-check company backed by energy investment firm ArcLight Capital Partners agreed to acquire and take public electric vehicle company Proterra Inc. in a deal that gives it an enterprise value of about $1.6 billion.
ArcLight Clean Transition Corp. , the special-purpose acquisition company, will use $278 million raised through an initial public offering in September as well as $415 million being raised in a private investment in public securities transaction to help finance the deal, regulatory filings show. The deal is expected to close in the first half of the year.
Shares of the blank-check company, which priced its IPO at $10 a share and closed Monday at $12.19 each, more than doubled on Tuesday on news of the deal, closing at $25.20.
Blank-check companies invert the usual model of publicly traded businesses, raising money from investors first and then hunting down an operating company to acquire and take public. In this case, ArcLight is latching on to a wildly popular market.
Investors have chased after electric vehicle makers over the past year. Shares of auto maker Tesla Inc., which tumbled to as little as $72.24 in mid-March, soared in subsequent months, closing 2020 at $705.67 and elevating founder Elon Musk in the ranks of the world’s richest people. Tesla’s stock has climbed since then to close at $849.44 on Tuesday.
The ArcLight-based SPAC looked at a number of potential targets before choosing Proterra, and was attracted by the company’s proven products and significant revenue, two factors that differentiate the company from most of its competitors, according to people familiar with the matter.
“It is a company that has been selling products for 10 years and accumulated a [real] world mileage and developed their products to a level that others are dreaming to get to today,” one of the people said.
Burlingame, Calif.-based Proterra is in a related but decidedly different market, as it produces electric buses and battery assemblies for use in commercial vehicles and charging systems rather than for passenger cars. The company expects to use the roughly $648 million in SPAC deal proceeds to fund research and development as well as to expand its battery production capacity, the filings show.
Even though Proterra is best known as an electric-vehicle maker, the SPAC executive team also was attracted to the fact the company also produces a range of other products, from batteries and powertrains to charging systems and software, according to the people. They added that the SPAC saw particular commercial potential in expanding Proterra’s charging-system business, which includes not only charging equipment but systems that help fleet owners manage the charging needs of their vehicles.
Proterra has an order backlog totaling $750 million and expected 2020 revenue of about $193 million. The company also expects revenue to rise to $439 million in 2022 and about $2.57 billion in 2025, according to the filings. The company estimates the size of the global market for commercial vehicles at about $225 billion.
ArcLight founder Daniel R. Revers leads the SPAC as chairman. Some of the expected PIPE investors include ArcLight funds, as well as Proterra strategic partners Daimler Trucks and Constellation, and existing investors Franklin Templeton Investments, Broadscale, 40 North and G2VP, the filings indicate.
New investors backing the company through the PIPE transaction include venture capitalist Chamath Palihapitiya and Fidelity Management & Research Co., as well as funds and accounts managed by BlackRock Inc. and Neuberger Berman Group.