The inside story of how Henrik Fisker pulled off a $3 billion deal to fuel his electric car comeback (FSR)

Henrik Fisker

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Henrik Fisker is a study in resiliency. 

The demise of his first company, Fisker Automotive, in 2013 was a major setback, but it didn’t prevent the Danish-born designer and entrepreneur from staging a second act in the auto industry. In 2016, he founded Fisker, Inc. and started raising funds to build an all-electric sports sedan, the EMotion.

By 2019, Fisker, Inc. had evolved into a different kind of startup, with a new vehicle under construction: the Ocean SUV. But Fisker knew he was going to need to raise a lot of money to build it — a billion dollars more.

Fisker had already gone the traditional venture capital route, with Fisker Automotive, and wasn’t eager to do it again. “You raise the $100 million, but you still have to raise the billion,” the CEO, 57, said of the quest to round up private funders.

Instead, he began to concentrate on the revival of a formerly spurned type of deal, a reverse-merger with a “special purpose acquisition company”, or SPAC that could generate the big money that getting the Ocean to market would require.

A major player comes into the game

Enter Apollo Global Management. The investment colossus, co-founded in 1990 by Leon Black and a group of Drexel Burnham Lambert refugees, has more than $430 billion under management, so in the grand scheme of things, the roughly $550 million that the firm organized in 2019 to capitalize its SPAC fund, dubbed “Spartan 1,” wasn’t eye-catching.

But in the realm of electric-vehicle startups, the SPAC captured plenty of attention when it announced in July that it would combine with Fisker, Inc., establishing a $3 billion valuation for the company. More importantly, it would raise the funds that the startup would need to bring the Ocean to market by 2022.

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The reverse-merger was engineered by what finance insiders call a “blank check” firm that’s basically a team of investors looking for something to buy. Apollo initially set up Spartan as an energy SPAC, but investor enthusiasm in that space was lacking.

In early 2020, however, there was considerable momentum in the auto sector, with GM announcing an ambitious electrification strategy and unveiling is new Ultium battery technology, and with Tesla’s share price going ballistic, eventually making it the most valuable automaker in the world, worth $400 billion and winning CEO Elon Musk’s company a coveted place in the S&P 500 index. At the same time, governments around the world were starting to demand a phase-out of the internal-combustion engine.

So Spartan’s managers started looking for a carmaker. Or more accurately, they took another look at a carmaker they already knew about.

Various SPACs were kicking Fisker’s tires

“In 2019, we were doing a roadshow to raise private money to build the first prototype of the Ocean,” Fisker said. “We went to New York and talked to several banks, and we met with Apollo. But nothing came of it.”

At the time, another SPAC was also kicking Fisker’s tires. It was VectoIQ, a fund set up by former GM board member Steve Girsky. That …read more

Source:: Business Insider


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