Auto ventures capitalize on stock market strength to push through acquisitions and IPOs

Welcome to another edition of The Friday 5 with Steve Greenfield, Founder and CEO of Automotive Ventures, an auto technology advisory firm that helps entrepreneurs raise money and maximize the value of their companies. In this episode, Greenfield takes a look at M&A activity, stock market performance, and the SEC investigation of Nikola.

Stock Markets

This week, stock markets remain buoyant, and many companies are taking that opportunity to push through their IPOs. With the uncertainty of the election, the backlog of unemployment that will have to play its way through the economy, and the continuing global health pandemic, there’s just immense anxiety about what 2021 is going to bring.

The IPO window may close any time, so there’s a mad rush to get out in the market.

Schomp Automotive Group Porsche Salt Lake City

It’s great to see physical automotive dealership deals happening. This week, a partnership between the Elway Dealership Group and Schomp Automotive Group purchased Porsche Salt Lake City from Strong Automotive Group. The Strong family established Porsche Salt Lake City in 1958, establishing one of the first Porsche dealerships in the United States.

Legendary Hall of Fame football player John Elway, and business partner Mitch Pierce founded the Elway Dealership Group in 2004. The group has holdings in Colorado and California. Schomp Automotive Group is a fourth-generation family-owned business with dealerships in Colorado and Utah.

VROOM – Additional 9M shares

Online used car retailer Vroom is offering 9 million shares of its common stock pursuant to a registration filed with the Securities and Exchange Commission. Vroom expects to grant the underwriters a 30-day option to purchase up to an additional 1.35 million shares of its common stock. Since Vroom’s IPO on June 9, the stock has performed strongly, largely buoyed by investors’ interest in online car shopping accelerating under COVID-19.

Nikola

The Securities and Exchange Commission is examining Nikola Corp. to assess the merits of a short-seller’s allegations that the electric truck maker deceived investors about its business prospects. Hindenburg Research accused Nikola of an “intricate fraud” that, among other allegations, overstated the capabilities of its earliest test trucks.

Nikola has pushed back, accusing the short seller of making misleading statements that were designed to manipulate its shares. Last week, General Motors made a surprise announcement that it would take a $2 billion equity stake in Nikola. The deal committed GM to manufacturing the startup’s debut electric pickup, called the Badger.

ChargePoint nears deal to go public

ChargePoint, one of the world’s oldest and largest electric vehicle charging networks, is nearing a deal to go public through a reverse merger with another SPAC, Switchback Energy Acquisition Corp. The deal for ChargePoint could value the company at more than $2 billion and be announced as early as next week.

ChargePoint, founded in 2007, last month closed on a $127 million funding round which valued the company at $1.37 billion, attracted investors including German automakers Daimler and BMW and the venture arm of oil company Chevron Corp.

What’s on the Horizon?

It’ll be particularly interesting in how these electric vehicle SPACs play out over the remainder of the year, and how the public markets embrace these players. To recap, Fisker has announced a merger with Spartan Energy Acquisition Corp., in a deal that values the company at $2.9 billion. Fisker says the deal will enable it to bring its Ocean SUV to market by the end of 2022.

Lordstown Motors says it will merge with DiamondPeak Holdings Corp., at a valuation of $1.6 billion. The deal is expected to close in the fourth quarter. And, electric vehicle manufacturer Canoo will go public via a merger with Hennessy Capital Acquisition Corp 4. The company expects to deliver its first model to consumers in 2022.

It’s an exciting time for automotive tech companies, and we should see a lot of M&A activity over the remainder of the year. Tune in next week for another recap.

Did you miss last week’s episode of The Friday 5? Watch it here now! And don’t forget to share your questions and comments with Jim Fitzpatrick at jfitzpatrick@cbtnews.com.