SPAC Momentum Charges On with Nikola
Phoenix-based Nikola Corporation joined Nasdaq on Thursday, June 4th, under the ticker symbol (Nasdaq: NKLA).
Nikola is a pioneer in electric heavy duty applications, offering both pure electric and also hydrogen electric powertrains to cover class 8 in transportation.
Nikola announced the completion of its previously announced business combination with VectoIQ Acquisition Corp. (Nasdaq: VTIQ), a publicly-traded special purpose acquisition company (SPAC).
Eklavya Saraf, Nasdaq’s global head of SPAC listings, goes behind Thursday’s virtual Nasdaq Closing Bell, sharing his insight on why Nikola chose a SPAC listing as the right capital decision for the company’s growth initiatives.
Nasdaq is continuing its SPAC momentum with disruptive technology companies and the recent addition of Nikola Motor Company. How do SPACs provide a path for companies like Nikola pursuing access to the public markets?
Disruptive, forward-thinking companies can complete deals in different markets. The state of the market affects the ability for companies to IPO and raise capital. Unique companies have greater optionality. There is a scarcity of forward-thinking investment opportunities. The SPAC continues to be an option for founders to seek capital for growth initiatives, and it has increased in popularity in recent years.
What is a SPAC? What are some of the differences between a SPAC IPO and a traditional IPO?
SPACs are an alternative way to go public compared to a traditional IPO. A SPAC is a publicly-traded investment vehicle that raises funds through an IPO in order to acquire an existing company. A SPAC can offer a business a faster process to going public with guidance from an experienced partner. The timeframe that allows a SPAC to identify and complete an acquisition can help provide a more resilient foundation against the background of market volatility. A number of notable companies have entered the public markets through mergers with SPACs.
What does the process entail for leading up to a SPAC initial public offering, and how did Nikola Motors prepare to go public?
As an example, a SPAC raises capital and prices at $10 per share. The cash is held in a trust. The SPAC typically has 24 months to complete an acquisition of an operating company. Often times a PIPE deal (private investment in public equity) is structured as part of the transaction. In the case of Nikola, the proceeds from the transaction will be used to fund operations and growth and will be a combination of VectoIQ’s cash and a $525M private placement.
Nikola is thrilled to complete the Nasdaq listing and be part of the ESG investment world. This is a significant endorsement in fuel-cell and battery-electric technology. Since Nikola launched its first fuel-cell semi-truck, you have seen the world rally behind hydrogen and follow our lead. What was once considered the fuel of the future is now accepted as today’s solution.Trevor Milton, Nikola Founder and Executive Chairman
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