After shunning public ownership because reporting quarterly financials didn't mesh with its business, fuel cell trucking startup Nikola Corp. pivoted Tuesday to merge with VectoIQ, a NASDAQ-listed investment fund that will replace private equity scared off by poorly managed startups."WeWork really ruined a lot of things for the private market," Nikola CEO Trevor Milton told FreightWaves on Tuesday. "In my network, there are probably a dozen or two really awesome entrepreneurs, and every one of them said the capital just became incredibly difficult after WeWork."
A commercial real estate company that provides scalable shared workspaces for technology startups, WeWork has been in turmoil since it filed its public-offering paperwork in August 2019. The coworking company cut its valuation to as low as $10 billion from $47 billion, removed its CEO, and indefinitely delayed its initial public offering.
Private Equity Skeptics"The first thing investors would do is come in and say, ... ‘Why are you not another WeWork?'" Milton said. "What ended up happening is that investors said, ‘We want more clarity, we want more transparency.' It kind of changed, where all the investors want you to be public right now."
Going public at such an early stage has risks, said Mike Ramsey, an analyst with Gartner Inc. who covers electrification and autonomous vehicle technology.
"While it opens up more fundraising opportunities, it also requires financial disclosures that might not paint a great picture," Ramsey told FreightWaves. "It also opens a company to much more scrutiny in general as there is a new class of owners."
Money In The BankNikola, which plans to produce battery-electric heavy-duty trucks in Europe beginning in 2021 followed by hydrogen-powered fuel cell electric Class 8 trucks in the United States in early 2023, has attracted significant investment, including a $250 million D round led by British industrial conglomerate CNH Industrial N.V. (NYSE: CNHI).
VectoIQ, valued at $230 million, will take the Nikola name and create a new NASDAQ listing, NKLA, if it gets U.S. Securities and Exchange Commission approval. Milton said that is expected within two months.Nikola will have a $3.3 billion valuation and immediate access to an estimated $700 million in cash.
In a private investment in public equity (PIPE) deal, institutional investors, including Fidelity Management & Research Co., ValueAct Spring Fund and P. Schoenfeld Asset Management LP, committed $525 million to purchase shares at $10 each, below VectoIQ's Tuesday closing price of $11.50....MOREIf interested see also:
October 2019
ICYMI: Following CNH Industrial's $250 Mil., Bosch And Hanwha Invest $230 Million In Nikola's Hydrogen-Electric Trucks
May 2018
Watch Out Elon: Nikola Is Offering More Than Just Trucks (TSLA; NEL:Oslo)
May 2018
Watch Out Elon: "Anheuser-Busch just bought 800 fuel cell Nikola trucks" (TSLA; NEL:Oslo)
