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  • Greater China

China's VC-backed Perfect Corp agrees $1bn SPAC merger

  • Tim Burroughs
  • 04 March 2022
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Perfect Corp, a Chinese software developer specialising in artificial intelligence (AI) and augmented reality (AR) solutions that allow consumers to experience brands, has agreed to merge with a US-listed special purpose acquisition company (SPAC) at an enterprise value of USD 1bn.

The SPAC, Provident Acquisition Corp, raised USD 200m last year to pursue targets in Asia, with a particular focus on technology in Southeast Asia. The SPAC is led by two senior professionals from Singapore-based private equity firm Provident Capital. They also part own the sponsor entity.

Perfect has received three rounds of private funding, according to AVCJ Research. China Creation Ventures led a USD 25m Series A in 2017, with participation from Yuanta Asia Investment, Extol Capital, and CyberLink Corp. This was followed by a Series B of undisclosed size in 2019 and a USD 50m Series C in 2021. These were led by Alibaba Group and Goldman Sachs, respectively.

Founded in 2015, Perfect claims to be transforming shopping through 3D facial and hand modelling, AI skin diagnostics and simulations, AR-empowered video consultations, and live product try-ons. The goal is to provide a personalised and convenient omnichannel shopping experience that leads to better customer engagement, increased purchase conversion, and growth in sales.

The company’s enterprise solutions are utilised by 95% of the world’s top 20 global beauty groups and over 400 beauty brands in more than 80 countries. It also offers consumer-facing apps that have achieved 950m downloads globally and enabled 10bn virtual product try-ons annually.

“We democratise the shopping experience for consumers and brands with our leading AR and AI SaaS solutions. At the same time, we empower brands large and small to provide their customers with an enjoyable, convenient, and personalised omnichannel shopping experience through innovative technologies,” said Alice Chang, founder and CEO of Perfect, in a statement.

“Current consumer trends, such as increasing penetration of omnichannel consumption, hygiene awareness, and focus on ESG, provide us with favourable tailwinds to accelerate growth and adoption of our services.”

The SPAC sponsor will own 4% of the merged entity – it typically receives a 20% interest in the SPAC, not the merged entity, for a nominal sum post-listing. Public shareholders in the SPAC and PIPE investors participating in the de-SPAC will hold 20% and 4%, respectively. Existing shareholders in Perfect are rolling over equity positions worth USD 1bn for a 72% stake.

The PIPE of USD 50m includes contributions from Chanel, CyberLink, Shiseido, and Snap as well as unnamed financial investors. In addition, Provident Acquisition secured USD 55m in forward purchasing agreements prior to its public listing.

The transaction, which values the company at 16.9x projected revenue for 2022, will create balance sheet cash of USD 300m, according to a presentation. It still needs to be approved by a majority of SPAC investors. On completion, they can exercise their warrants and purchase shares or redeem some or all their shares for cash.

Perfect generated USD 31.3m in revenue in 2020, up from USD 23.9m the previous year. Over the same period, its net loss widened from USD 1.06m to USD 4.18m.

The company is projecting revenue of USD 42m in 2021, USD 60m in 2022, and USD 153m in 2025. EBITDA, currently negative, is expected to reach USD 13m with a margin of 22% in 2022 and USD 59m with a margin of 39% in 2025.

Separately, Jeneration Acquisition Corp, a SPAC sponsored by the founder and CIO of China technology sector investor Jeneration Capital, withdrew its IPO application.

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  • Greater China
  • Consumer
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  • IPO
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  • SPAC
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  • Provident Capital
  • China Creation Ventures
  • Goldman Sachs
  • Alibaba Group

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