VectoIQ Acquisition Corp. Prices Their $200 Million IPO…With a Few Tweaks to the Terms
On Tuesday evening, VectoIQ announced the pricing of its Nasdaq-listed SPAC, raising $200 million in its initial public offering. The SPAC intends to focus on the industrial technology, transportation and smart mobility industries, and will be led by Stephen Girsky. Mr. Girsky was instrumental in leading General Motors out of bankruptcy while serving as GM’s Vice Chairman from 2010 to 2014.
Similar to Trinity Merger Corp., VectoIQ’s IPO terms changed slightly from the initial filing, but as you’ll see below, there is a good reason.
To start, VectoIQ’s unit is now comprised of one share of common stock and one full warrant. Additionally, the trust is over-funded at 101%, or $10.10 per share. The initial filing stated one share and three-fourths of one warrant and a trust value of 100%, or $10.00 per share.
However, it should be noted that Cowen is one of the Sponsors of VectoIQ and purchased 1,449,000 Founder Shares and has also committed to purchase 200,000 Private Units at $10.00 (220,000 if the over-allotment is exercised). In my experience, banks do not like to part with their money so take this a sign of confidence.
On top of that, VectoIQ has a backstop. A fund affiliated with P. Schoenfeld Asset Management LP, has committed to a forward purchase agreement of up to $25 million. Albeit, the fund has a “right to be excused” from purchasing, but then they lose their Founder Shares.
And then the cherry on top of the backstop is the “Anchor Investor” – BlackRock Funds. Blackrock Funds, which is also one of the Sponsors and owns 468,277 Founder Shares, AND also committed to purchasing 50,000 Private Units, expressed an interest in purchasing an additional $25 million of units in the IPO (the Anchor Investment). This means that (per the S-1)…
“In the event that such anchor investor purchases such units (either in this offering or after) and votes them in favor of our initial business combination, it is possible that no votes from other public stockholders would be required to approve our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction.”
In a nutshell, I’m not surprised the underwriters had to sweeten the deal by going to 101% and offering a full warrant. Not because this is a bad deal (it looks good), but because the institutions that participate in SPACs now have no leverage for negotiating the conversion of their shares for the pro rata amount in trust, i.e., VectoIQ basically already has the vote. So…in order to get the institutions into the IPO, they needed to add a little extra juice and it looks like $10.10 per share and a full warrant did the trick.
This brings the total-to-date 2018 SPAC IPO deal count to 14 with total gross proceeds of $3,053.5 billion. At this pace, 2018 should at least equal 2017’s numbers and will most likely exceed them.
Congratulations to VectoIQ and well done to the underwriters – Cowen and Chardan.
VectoIQ’s unit will begin trading on Wednesday, March 16th, under the symbol VTIQU.
AGBA (NASDAQ:AGBA) stock is up over +90% this morning following a +211% premarket spike on news it has signed a definitive agreement to combine with social streaming video platform Triller. AGBA, the company itself, was formed by the $555 million combination between a SPAC of the same name and TAG Companies, a financial services firm...
At the SPAC of Dawn Since closing its combination with DHC last month, AI customer engagement firm BEN (NASDAQ:BNAI) has rolled out new partnerships with call center and healthcare clients. And, while it faces a fair bit of competition in the chatbot realm, several high-profile institutions have demonstrated that creating one that provides useful services...
Blue Ocean (NASDAQ:BOCN) provided significantly more texture today in the presentation for its $275 million combination with Asian digital media group TNL Mediagene, which it expects to hit profitability in the second half of the year despite a slight shakeup in financing for the transaction. The first big update in the first investor deck is...
At the SPAC of Dawn A brand new market may have just opened up for space de-SPACs as NASA administrator Bill Nelson announced a shift in the agency’s $11 billion program for a mission to return samples from Mars. Rather than rely on the agency’s internal technologies that would be predicted to get a sample...
Overall deal flow between SPACs and biotech firms has slowed over the last year, but some pending FDA changes could breathe new life into particular business models within the space. In particular, the FDA has asked Congress as part of its 2025 Legislative Proposals to eliminate the interchangeability designation for biosimilar medications, claiming the existing...