The only operating
company expected to launch an IPO this week is cloud software developer
Pluralsight (PS), which is set to price its now up-sized 20.7 mln share deal
tonight and open for trading tomorrow morning. In the meantime, we have a blank
check company that just launched today, VectoIQ (VTIQU). For those unfamiliar,
a blank check company is explicitly formed to effect a merger, acquisition,
reorganization, or recapitalization with another business. Therefore, it does
not have any business operations or financials.
Taking a look at the deal, VTIQU offered 20.0 mln shares at $10 each, raising total gross proceeds of $200 mln. The lead underwriters on the IPO were Cowen and Company and Chardan. Shares are slated to open for trading this morning on the Nasdaq.
While the company may look for a business combination in any industry or geographic location, it currently will focus on opportunities within the industrial technology, transportation, and smart mobility industries. The company says that over the last several years, there has been an increase in private equity and venture backed capital invested in the automotive/transportation technology sector.
Global venture capital funding in the transportation industry increased from less than $1 bln in 2012 to approximately $16 bln in 2016, according to a 2017 Crunchbase report. However, there have been relatively few IPOs in this industry in recent years, with only 20 IPOs of automotive businesses in the past five years.
VTIQU has identified some criteria it will use in evaluating potential target businesses:
- There will be emphasis on companies that can benefit from a public listing and access to the public capital markets.
- Businesses will be targeted that are market leaders, with established technologies and attractive financial metrics and/or prospects, where it believes that its industry expertise and relationships can be used to create opportunities for value creation, whether for acquisitions, capital investments in organic growth opportunities, or in generating greater operating efficiencies.
- There will be a focus on middle-market businesses. It believes targeting businesses in the middle market will provide the greatest number of opportunities for investment and will maximize the collective network of our management team.
ZTIQU will have until 24 months from the closing of this offering to consummate an initial business combination. If it is unable to consummate an initial business combination within this time period, it will redeem 100% of the outstanding public shares.