Charging company EVgo goes public through the SPAC merger

Another company in the electric vehicle sector goes public by merging with a company known as SPAC, or a special purpose acquisition company. This time, it’s EVgo, one of the leading providers of electric vehicle charging stations in the United States.

The deal is expected to earn EVgo $ 575 million. When closed, EVgo will become a publicly traded company on the New York Stock Exchange.

In a sort of poetic touch, the investment fund that merges with EVgo to make it public is the one launched by climate investor David Crane. Crane was once the CEO of energy company NRG, which helped start EVgo ten years ago. Approximately $ 175 million of the proceeds will come from Crane’s SPAC (called Climate Change Crisis Real Impact I Acquisition Corporation). The remaining $ 400 million comes from new side funding hosted by Crane’s SPAC that includes institutional investors such as BlackRock and Pacific Investment Management Company (PIMCO).

There has been a mad rush of PSPC mergers in the electric vehicle industry over the past seven months as investors sought to capitalize on the momentum created by Tesla’s skyrocketing valuation. EVgo joins Canoo, Fisker Inc., Lordstown Motors, Nikola, Arrival, Hyliion and its competitor ChargePoint by going public via the SPAC route. It certainly won’t be the last either, as startups like Lucid Motors and even Faraday Future are in talks to do the same.

“Which is so encouraging for me,” said Cathy Zoi, CEO of EVgo The edge in an interview, “[is] the market now wants to support the companies that do what EVgo does. ”

EVgo currently operates more than 800 DC fast charging stations in 34 US states. Last year, it announced a partnership with General Motors that is supposed to triple that number, while boosting the ability to recharge at faster rates comparable to those offered by Tesla’s Supercharger and Volkswagen’s Electrify America networks. It has also partnered with Uber and Lyft to provide chargers for electric transport vehicles.

Going public won’t change those expansion goals, according to Zoi. “This capital allows us to execute a business plan and we can continue to do what we are doing, which is to build and operate convenient and reliable rapid recharge across America as the market moves faster.” to electrify cars, ”she said. Zoi also said she believes EVgo can carve out a big foothold in the commercial space as more companies – including, most recently, GM – focus on electrifying trucks and vehicles. vans.

The recent boom in PSPC mergers has been so formidable that some companies have gone public when they have a chance of short-term profitability. And while much of the attention may be focused on businesses that connect with consumers, Crane said. The edge in an interview his team has “done very well” in convincing investors like PIMCO and BlackRock of the advantage of EVgo: making technology that other automakers – large and small – rely on.

“I don’t think we’ve come across a single investor who has expressed even an iota of doubt in the market here. Where the fault line seems to develop for investors is that many of them are much more drawn to what Cathy does – that is, as long as [companies make new] plug-in vehicles, Cathy wins, ”he says. “There is [investors] who are a little reluctant to bet on individual car manufacturers. “

“Everyone would love to duplicate a Tesla valuation, but they realize there won’t be [a lot of those]Crane added. “So a company like EVgo that serves the entire industry is attractive to everyone.”

One of the downsides of PSPC mergers is that because it is technically an acquisition, the acquiree faces looser regulatory scrutiny than if it had gone the traditional IPO route. It is difficult to say what kinds of problems can still cause, as most of these deals were made recently. But that became a problem with Nikola last year when the fraud accusations started to fly.

Zoi said the difference with EVgo is that it has a product in the world. “Whether you’re a giant institutional investor or you’re someone who just manages your own money, you can actually go to an EVgo station and say it’s reliable, convenient,” she says.

Crane, meanwhile, focused on the multi-month process that led to the acquisition of EVgo.

“We have been very thorough in our due diligence. And we asked a lot of questions. We spoke to a lot of people. We’ve done a lot of research, he says. “I think people look at myself and my partners and (his PSPC) and say, yeah, you know, we believe they kicked the tires and there won’t be any nasty surprises here.”