Lion Electric to go public
The Lion Electric Co. has chosen to forgo plans for a solo initial public offering and instead pursued a listing on the New York Stock Exchange via a merger with a U.S. blank-cheque company in an effort to accelerate its growth plans.
Saint-Jerome, Que.-based Lion Electric announced Monday it's merging with Kansas City-based Northern Genesis Acquisition Corp., a special-purpose acquisition company (SPAC), in a move the two firms said would lead to a listing on the New York Stock Exchange with an expected US$1.9-billion market capitalization.
“We were debating internally whether we should go through an IPO or whether we should go through a SPAC,” Marc Bédard, CEO and founder of Lion Electric, told the Financial Post after announcing the deal, which will provide the electric vehicle manufacturer with US$500 million in cash that will fully fund its fiveyear growth plans.
Bédard said numerous SPACs came calling and the availability of the capital in a short amount of time encouraged the company to skip a more conventional IPO.
SPACs are also called “blank cheque” companies as investors
Lion surpasses all our expectations ... we are confident that it has the potential to be a great public company.
essentially write a cheque to a publicly traded shell company to shop for a promising private company and take it public via the listed holding company.
SPACs have emerged as among the hottest money-raising vehicles on Wall Street and Bay Street this year, raising more than US$35 billion in the first nine months of 2020 in the United States, a figure that's about half of all the money raised by SPACs since their inception in the 1980s, according to Bloomberg estimates.
Bedard said Lion Electric chose Northern Genesis for a merger because the firm's founders included Ian Robertson, who was previously CEO of Oakville, Ont.-based Algonquin Power and Utilities Corp. and had demonstrated an ability to grow that renewable energy power company.
“We thought that's a great fit and we think that speed to market is really important right now,” Bédard said, adding that the US$500 million in funding from the deal will enable the company to buy and update an existing factory in the United States and build out a battery factory in Quebec — effectively funding Lion Electric's growth plans for the next five years all at once. Northern Genesis's Robertson said in a release that his acquisition company targets businesses with an existing customer base that can be “energized by exposure to the public markets.”
“Lion surpasses all our expectations on all these dimensions and we are confident that it has the potential to be a great public company in the emerging decarbonized economy,” said Robertson.
Investment in electric vehicles have gained traction as companies such as Tesla Inc. expect to win more market share for internal combustion engine cars and trucks in the coming years amid a government push around the world to accelerate climate change policies.
Bédard also tried to soothe Canadian fears that the company's deal with a U.S. SPAC would result in a relocation for the Montreal-area company. “Lion is still a Canadian company doing very well in the United States,” he said.