Another company in the electric vehicle sector is going public by merging with the so-called SPAC, or special purpose acquisition company. This time, it is EVgo, a leading supplier of electric vehicle charging stations in the USA.
The deal is expected to bring $ 575 million to EVgo. When it closes, EVgo will become a publicly traded company on the New York Stock Exchange.
In a kind of poetic twist, the investment fund that is merging with EVgo to make it public was started by climate investor David Crane. Crane was once CEO of the energy company NRG, which helped start EVgo a decade ago. Approximately $ 175 million of the proceeds will come from Crane’s SPAC (called Climate Change Crisis Real Impact I Acquisition Corporation). The other $ 400 million comes from a new round of simultaneous financing organized by Crane’s SPAC that includes institutional investors like BlackRock and Pacific Investment Management Company (PIMCO).
There has been a mad rush of SPAC mergers in the electric vehicle space for the past seven months, as investors have sought to capitalize on the momentum created by Tesla’s dizzying valuation. EVgo joins companies like Canoo, Fisker Inc., Lordstown Motors, Nikola, Arrival, Hyliion and competitor ChargePoint to go public through the SPAC route. It certainly won’t be the last, as startups like Lucid Motors and even Faraday Future are in talks to do the same.
“What’s so exciting for me,” said Cathy Zoi, CEO of EVgo The Verge in an interview, “[is] the market now has an appetite to support companies that do what EVgo does. ”
EVgo currently operates more than 800 DC fast charging stations in 34 states in the USA. Last year, it announced a partnership with General Motors that is expected to triple that number, while building the ability to charge faster rates comparable to those offered by Tesla’s Supercharger and Volkswagen’s Electrify America networks. It also partnered with Uber and Lyft to supply chargers for electric signaling vehicles.
Going public will not change these expansion goals, according to Zoi. “This capital allows us to execute a business plan and we can continue to do what we do, which is to build and operate fast, convenient and reliable shipments across America, as the market moves faster to electrify cars “, she said. Zoi also said that she believes that EVgo can gain a great position in the commercial space, as more companies – including, more recently, GM – focus on electrifying trucks and vans.
The recent boom in SPAC mergers has been so formidable that some companies are going public, despite having any chance of profitability in the short term. And while much of the attention may end up focused on consumer-oriented companies, Crane said The Verge in an interview that his team was “extremely successful” in convincing investors like PIMCO and BlackRock of the EVgo advantage: making technology that other automakers – big and small – trust.
“I don’t think we have found a single investor who expressed any doubts about the market here. Where the fault line seems to be developing for investors is that many of them are much more attracted to what Cathy does – that is, as long as [companies make new] plug-in vehicles, Cathy wins, ”he said. “Have [investors] who are a little suspicious of betting on individual automakers. “
“Everyone would like to duplicate a Tesla assessment, but they realize that there will be no [a lot of those], ”Crane added. “Therefore, a company like EVgo, which serves the entire sector, is attractive to everyone.”
A disadvantage of SPAC mergers is that, as it is technically an acquisition, the company being acquired faces a looser regulatory scrutiny than if it had followed the traditional IPO route. It is difficult to say what kind of problems this can still cause, since most of these deals have been closed recently. But that became a problem for Nikola last year, when allegations of fraud began to fly.
Zoi said the difference with EVgo is that it has a product in the world. “Whether you are a big institutional investor or a person who is just managing their own money, you can actually go and check out an EVgo station and say it is reliable, convenient,” she said.
Meanwhile, Crane emphasized the months-long process that led to the acquisition of EVgo.
“We were very meticulous in our diligence. And we asked a lot of questions. We talked to many people. We did a lot of research, he said. “I think people look at me and my partners and (their SPAC) and say, yes, you know, we believe they kicked the tires and there will be no unfortunate surprises here.”