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SPAC-u-loos January 25, 2021

Huge wave of SPAC IPO names as we start the week - Sunlight Financial, Latch, indie Semiconductor, The Hillman Group, Alight and Taboola.

Kris Tuttle

We've got a slew of new SPAC deals this morning. This a quick summary and we will be posting the decks and transcripts as we get them uploaded.

Sunlight Financial

This is a pretty hyped deal in the residential solar financing space. Chamath has been tweeting about it over the weekend. They are coming public via the Spartan Acquisition II (SPRQ).

The EV looks to be $1.3B with a raft of impressive players filing out the PIPE. Besides Chamath there is Coatue, BlackRock, Franklin and Neuberger Berman.

Valuation is said to be 21x 2021 adjusted EBITDA. Goldman Sachs pioneered this general approach in commercial solar over a decade ago and this represents the "consumerization" of it in the residential markets.

The company is also playing up the "FinTech" angle of their story which is another disintermediation of tradional banking services.

This one is already up sharply this morning to $16.29 for the common and $4.06 for the warrants.

Latch

Is coming public via TS Innovation (TSIA) and this is another one touted by Chamath so it's well-hyped this morning. The shares are already at $18 and the warrants are $6.25.

Latch is basically a "smart access" technology company to control access properties.

Revenues are growing fast and they did $167M in 2021. Demand for these products is growing not just from apartment and commercial property owners but also from residential and multi-family units for both short and long-term rental.

To add some sizzle to the story they company positions themselves as an "OS" for a building that includes additional functions around smart home applications.

Thanks to the investors in the $190M PIPE this one is getting plenty of attention and being valued a "SaaS play" on real estate.

Alight Solutions

These guys are in the HR solutions space and coming public via Foley Trasimene (WPF) which is a $1B SPAC. The EV is ~$7.3B.

We'll have to take a closer look at this one. They sit at the "intersection of healthcare, benefits and payroll" which doesn't sound very sexy but it's a large and stable business. Currently the shares are at $14.59 with the warrants at $4.35.

The Hillman Group

This is a large supplier of hardware and home improvement products. They are coming public via Landcadia III (LCY). A few notes on this one:

1) The EV will be $2.64B which includes a $375M PIPE. Sales this year are expected to be $1.4B. Adjusted EBITDA margins are 16%.

2) Sales to Home Depot (HD) and Lowe's (LOW) are about 50% of total revenue. The rest are through traditional hardware and speciality stores.

3) They are the leading provider of fasteners and also big in work gear, gloves and key making.

Overall a quality company that should probably be trading higher than 11x 2021 PPE. This one looks quiet so far with the common at $10.63 and the warrants at $2.33.

Taboola

Taboola is an internet advertising technology company that works to link content and consumers to increase audience size and drive engagement - which generates advertising revenue.

They are coming public via ION Acquisition (IACA). The EV looks to be about $2.6B ex-TAC revenue of $380M this year and adjusted EBITDA of $106M. They are blessed with rich comparables including theTradeDesk (TTD), MediaAlpha (MAX) and PubMatic (PUBM).

indie Semiconductor

This one is in the semiconductor space (which hasn't been as hot a sector in SPACland despite being very strong within the regular technology sector). indie Semiconductor is coming public via Thunder Bridge II (THBR) with an EV of $1.4B.

indie specializes in automotive components and is positioning themselves as a play on electric vehicles and automated driving. They'll be compared to some of the SPAC IPO names like Velodyne Lidar (VLDR).

Today they are more in parking assist, vision systems, wireless charging and infotainment but their pipeline includes more advanced systems.

Current revenues are very small at $23M but they company touts huge growth coming from design wins and their product pipeline with $500M projected in 2025.

Most of their growth and expanded profitability relies on products not yet developed or shipped so I'd say buyer beware on this one. Right now the shares are at $12.76 with the warrants at $3.20. The warrant prices will probably come down but that's just my guess.

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