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DENIS SVERDLOV, a former Russian deputy minister, was already a wealthy man from a telecom startup when he turned his attention to electric vehicles and founded Arrival Ltd. in 2015.
Four years later, it had injected about $ 450 million into the truck and bus manufacturer through an investment firm. Then, in November, it merged it with CIIG Merger Corp., a Special Purpose Acquisition Corporation, or SPAC, led by Peter Cuneo, former CEO of Marvel Entertainment.
The arrival, which has yet to start full production, is now worth $ 15.3 billion, more than double its valuation at the beginning of last year. Sverdlov, 42, who will control most of the London-based company’s stock once the deal is complete, will soon have a net worth of $ 11.7 billion, according to the Bloomberg Billionaires Index.
An Arrival spokesperson declined to comment on Sverdlov’s wealth. CIIG shareholders voted on Friday to approve the merger.
SPACs, cash-traded companies that merge with private companies to go public, have raised about $ 85 billion this year. Athletes and entertainers like Alex Rodriguez, Shaquille O’Neal, and Sammy Hagar have started blank check signing, along with a host of ultra-rich, including hedge fund manager William Ackman and former chairman of Goldman Sachs Group, Inc. Gary Cohn.
The arrival is not the only company that benefits greatly from SPACs. Air taxi startup Archer Aviation soared from $ 16 million in April 2020 to $ 3.8 billion through a merger announced last month with a blank check firm. The implied valuation of electric vehicle maker Lucid Motors, Inc., which recently agreed to combine with a SPAC led by former Citigroup, Inc. banker Michael Klein, surpassed $ 55 billion after the deal was announced, more than Ford Motor Co.’s market value.
“SPACs are a bonanza for those who organize them,” said Keith Johnston, CEO of the SFO Alliance, a London-based single-family office investment club.
US stocks have dominated the SPAC boom, but Europe’s stock exchanges are now catching up. However, the phenomenon is beginning to show cracks. The IPOX SPAC index, which tracks the performance of a broad group of blank check companies, has fallen nearly 20% from a February high. Many see the proliferation of these companies as a consequence of central banks flooding economies with new money during the pandemic.
Some recent SPAC mergers have received a tepid response from investors. Cerberus Telecom Acquisition Corp. and Motion Acquisition Corp. were trading below SPAC’s traditional IPO (initial public offering) price of $ 10 after announcing mergers last week.
Arrival’s valuation stems in part from dizzying evaluations from electric vehicle makers last year, though rising bond yields in recent weeks have weighed on the industry.
CIIG shares have fallen more than a fifth since hitting a record in December. Until the announced merger of the companies, Sverdlov had mainly financed the company himself.
Arrival, which plans to start testing some of its vehicles on public roads this year, has said it can avoid the financial difficulties faced by most vehicle manufacturers by building small factories that cost a fraction of those built by large vehicle manufacturers. commercial automobiles. The startup intends to have 31 plants by 2024 and hopes to start generating profits even earlier.
“There are more than 560 cities in the world that have a population of more than 1 million people, and each of these cities could have a micro-factory that produces 10,000 vehicles specifically designed for the needs of that market,” said Mr. Sverdlov. “This model can be as scalable as McDonald’s or Starbucks.” – Bloomberg
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