Corner Growth Acquisition Corp. (NASDAQ:COOL) has entered into a definitive agreement to combine with software firm Noventiq (LSE:NVIQ) at an enterprise value of $800 million, or 0.4x its FY2021 revenue.

The London-based company helps companies lead internal digital transformations to drive efficiencies in their IT, cloud storage and cybersecurity systems.

The combined company is expected to trade on the Nasdaq under the symbol “NVIQ” once the deal is completed in the second half of 2023.

Transaction Overview

Corner Growth has about $12 million in its current trust after seeing 97% of shares redeemed in a December extension vote. The parties expect this to be supplemented by $100 million in new financing of an unspecified type.

Noventiq expects to add this to $191 million in existing cash and come out of the deal with $278 million on its balance sheet after $25 million in transaction fees. The deal does not include a minimum cash condition.

The parties have not yet released an investor presentation but Corner Growth’s profile page will be updated once additional information is made available.

Company shareholders stand to earn up to 30,000,000 shares through an earnout which are to vest in equal thirds if the combined company trades at a VWAP of $14, $16 then $18 for 20 of 30 trading days within five years of close.

Corner Growth’s sponsor has agreed to transfer 5,000,000 of its promote shares (50%) to escrow and subject them to the same earnout terms. Another 2,500,000 (25%) will be subject to forfeiture based on the deal’s final gross proceeds.

If proceeds exceed $100 million, then Corner Growth will keep these shares. If proceeds drop below $25 million, then they will be forfeited. If they land somewhere in between, then the sponsor will receive a proportional amount of shares based on the point they hit between these two numbers.

Should Noventiq terminate the deal before its May 4, 2024 outside date, it is to owe Corner Growth a termination fee equal to 3% of the deal’s $1 billion equity value (about $33.3 million).

Quick Takes: Most companies that take the SPAC route to public markets have a specific reason for doing so.

These track across a large range, but SPACs have attracted many companies that are likely a year or a few too early to have a successful IPO campaigns. Others find the SPAC process useful in the one-two punch it can bring in terms of committed cash alongside the listing that results.

With so many SPAC vehicles out there – some battered by redemptions already – it appears some potential target companies also view them simply as floating capital raises at a time when private funding into startups is growing scarce.

Noventiq does not appear to be animated by any of these usual motives as it is already listed on a major exchange in London and does not appear to have an acute need for cash. The company reported $11.1 million in net profit from $1.9 billion in revenue in its 2021 fiscal year that ended in March 2022.

It saw 45% year-on-year turnover growth in its last reported quarter – Q3 2022 – generating nearly $400 million with $12.8 million in adjusted EBITDA for a 17.9% margin. Noventiq appears to have further doubled-down on its lack of need for cash alone by not insisting on a minimum cash condition in this deal.

Instead, the transaction appears to be serving as a convenient way to achieve some technical changes the company has been meaning to get around to.

When Noventiq first announced it had inked an LOI with Corner Growth February, its press release noted that the Board “believes that a listing on the Nasdaq in the United States, by way of a business combination with Corner Growth, is a positive and natural next step for the Company”.

The release went on to state that the Board believes that the price of the company’s global depository receipts (GDRs) in London were not reflective of the company’s value. The Board noted it was disappointed in London trading volumes and sees the Nasdaq as a better fit for the software company.

The move also comes as the software-provider and consultant is working to further internationalize its business. It announced three acquisitions in the third quarter of 2022 in India and Eastern Europe. These were not insignificant moves as they added about 1,600 employees to the company’s staff at a time when company was also finalizing the sale of its Russian business.

The move also coincides with a move to re-domicile the company from Cyprus to the Cayman Islands, which Noventiq believes will lead to a smoother de-SPACing process.

Given that it is primarily the technical benefits of a SPAC deal that Noventiq is seeking, a smoother process seems likely. Corner Growth will need to extend its June 21 transaction deadline to get the deal done, but that should just be one more technicality as Noventiq shifts across the pond.