An electric bus business pulled from the brink of collapse with the help of some South Carolina investors more than a decade ago is expected to board the Wall Street blank check train.
Proterra Inc. is among the first commercial ventures with a direct connection to the State of Palmetto to take the latest and most modern alternative route to public financial markets – through a “special asset acquisition company”, or SPAC.
The deal announced last week calls for the electric vehicle and battery manufacturer, previously based in Greenville, to join a new company that raised $ 278 million in an initial public offering last year. The transaction will give Proterra a market value of $ 1.6 billion and increase the amount of cash available to $ 825 million when it closes later this year.
Proterra has expanded to manufacture batteries and charging stations (above), which are an increasing part of its three-prong business. Proterra / supplied
Its partner is ArcLight Clean Transition Corp. Led by a Boston-based energy asset management company, the venture was created as a SPAC, meaning it asked investors to finance a “blank check” that would be settled later by merging with an existing company revenue generator that wants to go public.
It’s one of the hottest trends in high finance: Dealogic estimated that U.S.-listed specialty asset companies raised a record $ 82 billion last year, a six-fold increase from 2019.
ArcLight liked what it saw in Proterra, which moved its headquarters to the San Francisco area a few years ago, but maintained its factory and test track in the interior of the state, where it can produce up to 400 vehicles a year.
In addition to making transport trucks powered by electricity – about 550 are on the roads in North America and another 400 are on standby – the company develops batteries and builds charging systems. It projected last week that its annual revenue will exceed $ 2.5 billion in 2025, compared with about $ 193 million last year.
“We are electrifying the commercial vehicle industry by launching three complementary businesses,” said CEO Jack Allen during a conference call on Wednesday.
Allen, a former senior executive at heavy truck giant Navistar, took the wheel last year after serving as a board member. He said that one of the greatest advantages of Proterra is that it has a 10-year history and is “far from what we know is a steep learning curve”. He added that he is convinced that the company has the talent and technology to “completely disrupt the commercial diesel vehicle market that I spent 33 years developing”.
ArcLight CEO Jake Erhard said his energy investment company was also impressed by “Proterra’s pioneering advantage over its competitors”, as well as the “demonstrated ability” to quickly shift its growth plan into a gear. higher.
Getting low
The company has traveled many kilometers since its early days. At one point, the fledgling bus manufacturer almost collapsed, shortly after choosing Greenville as the location of its first plant.
Proterra, which was founded in Colorado, decided to plant its flag in the interior of the state after disbursing $ 20 million from MK Energy & Infrastructure. The investment firm was supposed to provide “strategic experience to Proterra as we grew up in the United States and look at global expansion,” according to a June 2010 statement. “Together, we will drive the public transport industry into the next era of clean transportation. “
Instead, the risky vehicle adventure almost ended in the ditch. His financial cushion disappeared overnight when the brains behind MK Energy were accused of defrauding public pension funds in Venezeula and later convicted of running an elaborate Ponzi scheme.
The alarm went off among country officials who helped recruit Proterra, said Matt Dunbar, managing director of VentureSouth, a Greenville-based group that invests in early-stage business.
“When the news broke … some city business leaders started picking up the phone to see if there was anything they could do to help the company survive this,” Dunbar recalled last week.
The SC Research Authority has agreed to provide a $ 250,000 loan. VentureSouth’s predecessor and about a dozen other investors raised an equal amount, with no expectation that they would see a return.
“We were able to get some bridge money that basically kept the lights on for longer,” said Dunbar.
The emergency cash injection was enough to keep the company running until Silicon Valley venture capital giant Kleiner Perkins Caufield & Byers completed a $ 30 million fundraising round in 2011. Since then, the list of partners and Proterra sponsors have grown to include affiliates of Daimler AG, Panasonic and other sign names.
Dunbar said that VentureSouth participated in all subsequent investment opportunities, providing a total of about $ 5 million. His shareholding will be transferred to the new public ownership structure listed on Nasdaq when the ArcLight-Proterra marriage is finalized, he said.
“We are excited for a number of reasons,” said Dunbar. “Certainly the path to liquidity for investors is important. But we are also excited about the opportunities that the company faces. Additional resources will allow it to continue to grow and impact the market as transit transitions from diesel and other energy systems bequeathed to electricity, which is cleaner, quieter and more efficient. “
New features, new rivals
Proterra still did not live up to the original expectations that were imagined when it was first pulled to South Carolina. An initial and overly optimistic forecast asked the company to create up to 1,300 direct jobs in the state by 2017 and generate a network of suppliers of green energy transport.
The Greenville plant employs about 350 workers. And the corporate office was moved in 2017 to the west coast epicenter of the electronic vehicle industry to side with other like-minded manufacturers like Tesla. Dunbar dismissed the relocation as a benign change of address, rather than a rejection, saying most of the top executives were already in the Bay Area.
David Clayton, executive director of Clemson’s International Automotive Research Center in Greenville, said Proterra remains “an important part of the state’s mobility ecosystem.”
“Carmakers aren’t exactly a dime a dozen,” he said last week. “The ones we have have a big impact on our economy.”
In a statement, a Proterra spokesman said the company “is proud of our long history in the Greenville community”, including its relationship with the local Greenlink bus service, which he called “one of our most important customers” .
The company said the partnership with ArcLight should be an advantage for the South Carolina website, where hiring has recently increased.
“This transaction will provide us with additional capital and resources to accelerate our growth and scale our business and manufacturing, including at our Greenville facility, as we enter our next chapter as a leader in publicly listed commercial EV technology,” according to the statement.
The competition is not standing idly by. Some are fueled by President-elect Joe Biden’s campaign pledge to swap around 500,000 conventional school buses for zero-emission models by 2030 and install tens of thousands of new charging stations across the country.
At least one rival Proterra is already trying to hit the pedal hard. Lion Electric CEO Marc Bedard said during an appearance on CNBC last week that the Canadian manufacturer plans to open a plant in the United States by 2023, which will be able to manufacture 20,000 battery-powered buses a year.
And, like Proterra, it is planning to become a publicly traded company this year through a blank check merger.