It is only fitting that one day after the newly IPO’d Nikola (NKLA) doubled its share price in one day, Kensington Capital Acquisition Corp (KCAC) filed for an IPO. The $175 million SPAC will be focused on “North American automotive & automotive-related targets” as its sponsor, Kensington Capital Partners, invests solely in this industry. The SPAC comes with a fleet of former auto-industry executives, bankers, and investors led by Justin Mirro.
Kensington’s history as an investor in the auto space has been mostly focused on OEM’s with market-leading technologies. From Cooper Standard’s Fortrex material to Nexteer, a former Delphi segment, which designs advanced steering technology, Justin Mirro’s team seems best suited for a merger with a domestic OEM.
The sponsor also publishes the Motor Weekly newsletter that highlights several articles, economic data, and comparables tables. This week’s issue highlights the rebound in used car sales. While this particular issue contained nothing extraordinary, investors may watch trends in the newsletter for hints at what the group is most focused on going forward.
The sponsor’s president and CEO of its SPAC is Justin Mirro. His career began with GM in both Detroit and Japan before enlisting in investment banking where he made a name for himself covering autos. Like many of his peers, Justin has Michigan roots and holds an engineering undergraduate degree. Mirro holds a genuine interest in cars as he was a test driver out of college for Car & Driver Magazine and holds a patent for an adjustable stabilizer bar used on the Land Cruiser SUV. Although it’s an SUV, the invention helps prevent the car from rolling when going into a sharp turn. Both anecdotes are suggestive that Mirro has an affinity for performance driving.
The Vice Chairman and President of KCAC will be Robert Remenar, also with Michigan roots and a laundry list of leadership positions in the auto sector. Like Mirro, he also worked at GM early in his career before taking leadership positions in companies like Nexteer and Cooper Standard, the latter a Kensington Capital portfolio company. Given the cyclicality of the sector, and a still depressed economic environment, Remenar’s value-add likely lies in his past successes with turnarounds. Nexteer, for example, was Delphi Steering until the GM restructuring during the financial crisis. More recently, Remenar was involved in Nexteer’s Hong Kong IPO and several other successful sales for companies, which he was a board member of.
It is somewhat surprising an auto-focused SPAC gave spotlight to their Chief Technology Officer in the S-1. Then again, leadership’s common denominators lie somewhere between engineering and Michigan, and CTO, Simon Boag, fits the bill as well. Boag’s resume is a unique blend of an engineering background and Silicon Valley. His time working with GM and their suppliers earned him a spot in the Automotive Hall of Fame, though in recent years he has shifted to a VC focus. In 2011 he became the CEO of Stage 2 Innovations, a late stage venture investor; then in 2013 joined IncWell, a Michigan-based VC. Most recently, Boag founded iWater Tech and starred in its “how-to” video for the smart shower head that helps conserve water. Sustainability is certainly a theme in the auto space of late, and the team’s history with OEM’s offers a hint into where their initial focus will be.
The terms are in line with a first time team, somewhat. They do have the ability to call the warrants for shares at $10.00, which is typically reserved for experienced SPACs with a deal under their belt. However, the 1/2 warrant should satisfy investors that are used to the 1/3 warrant that usually comes with the warrant call for shares term. Additionally, as said above, automotive is hot, as evidenced by Nikola, so this SPAC shouldn’t have any issues coming to market. This SPAC should price the last week of June.
Summary of terms below: