October 19, 2021

Excellent Pix

Unlimited Technology

Polestar joins the mobility companies fundraising through SPACs.

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Swedish electric car maker Polestaris the latest company planning a deal to go public through a special purpose acquisition company (SPAC). A deal with Gores Guggenheim Inc will raise a whopping $20 billion. As a result, Polestar gains three times its projected revenues for 2023.

Some history and context. Polestar is jointly owned by Volvo Cars and Chinese auto company Geely. Following the success of the Polestar 1 and 2 EVs, the company raised in April $550 million in external funding and plans to build the Polestar 3 SUV at Volvo’s U.S. plant,  in the second half of 2022.

The also company plans to launch two additional new models by 2024, and expand its global distribution footprint to 30 markets by 2023.

Okay, so what’s a SPAC?

A special purpose acquisition company (SPAC) is a shell company formed explicitly to raise money through an IPO, in order to acquire an existing company. Investors also call them “blank check companies.” 

(FYI: An IPO is an initial public offering where a company offers shares for the first time to raise money from public investors.)

A SPAC provides no commercial operations. They make no products and sell nothing. A SPAC typically has two years to complete an acquisition, or they must return their funds to investors.

SPACs are generally formed by investors focused or experienced with a particular sector who are closely knowledgeable about trends and tech. 

What’s the big deal? 

SPACs have grown in popularity over the last few years. According to Pitchbook, Q1 2021 saw 325 SPAC deals issued, compared to 276 deals in 2020 and 83 in 2019.

And a lot of these deals have been taking place in the mobility industry.

a look at mobility SPAC investments