(ATF) Electric vehicle (EV) firm Lucid Motors is close to a deal to go public at a roughly $12 billion valuation via Michael Klein’s special purpose acquisition company (SPAC) Churchill Capital IV. Chinese backers including BAIC Motor and LeEco could gain from a deal.
A merger between Lucid Motors and Klein’s Churchill Capital IV would be the biggest in a string of deals by electric vehicle makers such as Nikola and Fisker that have gone public by combining with SPACs.
Churchill Capital IV has initiated talks with investors to raise more than $1 billion by selling shares in a private investment in public equity (PIPE) transaction for the deal with Lucid, Reuters reported on Tuesday February 16. The size of the PIPE could reach $1.5 billion or more based on investor demand, a source added.
These funds would be in addition to the $2 billion Churchill Capital IV raised in an initial public offering (IPO) in July on the New York Stock Exchange (NYSE). Lucid and Klein have agreed on the key terms of the deal, according to the sources.
If the PIPE fundraising concludes successfully, a deal could be announced as early as this month, according to the sources. Churchill Capital IV and Lucid did not comment.
Churchill Capital IV’s stock on the NYSE rose by 31.8% on the day and closed at $52.70 on Tuesday. It rose by over 300% after after a report emerged in January about a potential deal with Lucid, in an unusually sharp jump for a SPAC price. SPACs typically trade relatively close to their normal listing price of $10 until a target is announced but the increasingly frothy market for the financing vehicles is leading to greater price volatility.
Reddit speculation
The report about a potential deal with Lucid has now proved correct, which may prompt regulatory investigation about information leakage, though much of the price surge was driven by speculation on Reddit and other social media.
Lucid Motors was founded in 2007 as Atieva by former Tesla executive Bernard Tse and entrepreneur Sam Weng. It was funded initially by Chinese and Silicon Valley venture investors, with additional funding from backers like state-owned Chinese automaker BAIC Motor and Chinese technology company LeEco.
To help fund construction of a US assembly plant in Arizona, Lucid was boosted by a $1 billion investment in 2018 by Saudi Arabia’s Public Investment Fund.
Investors keen on SPACs are on the hunt for electric vehicle startups, hoping to identify the next Tesla. Some deals such as Fisker have delivered for SPAC investors, but others such as Nikola have given up their short-term gains.
Former Citigroup dealmaker Michael Klein has raised a string of SPACs which have done deals for companies including healthcare-services company MultiPlan and analytics firm Clarivate. This month he raised an extra $1.68 billion in two further Churchill Capital deals – Churchill Capital VI and VII.
ALSO SEE:
- Arnault and Mustier take SPAC fintech boom global
- How the SPAC ‘bubble’ can help establish pricing norms
- SPACtacular: Blank-cheque firms hit the jackpot in 2020
- Hong Kong set to be world’s biggest SPAC market outside US
- SPACs set to surge in Asia-Pacific as tech unicorns prepare for IPOs
- Deal for $10 billion Tokopedia could jump start Asian SPAC flow
- Didi Chuxing investor SoftBank set to join SPAC boom
