L Catterton Asia SPAC to merge with Geely-owned Lotus EV unit

The deal gives Lotus Tech a pro forma enterprise value of USD 5.45bn, implying a revenue multiple of 0.9x based on projections for the 2024 financial year.

Geely acquired a 51% interest in Lotus, a sports car brand, in 2017 from Malaysian original equipment manufacturer (OEM) Proton. The remaining 49% went to Etika Automotive, a company controlled by Proton’s major shareholder. Geely and Etika are named as shareholders in Lotus Tech alongside Nio Capital. All three will roll over their interests into the merged entity.

Nio Capital, an investment firm established by the founder of Chinese EV maker Nio, participated in a funding round for Lotus Tech in 2021 at a reported valuation of USD 2.3bn. This coincided with Lotus announcing plans to build an EV-only plant in Wuhan – its first of any kind outside the UK – and launch four EV models within five years.

Deliveries of the Eletre, Lotus Tech’s first fully electric hyper SUV, are expected to begin in China this quarter and in the UK and EU later in the year. The vehicle features L4 hardware capabilities – enabling it to be fully autonomous in certain situations but with a human override option – including LiDAR. Lotus Tech is also planning to launch an E-segment sedan and a D-segment SUV.

The company has also entered into an agreement with Lotus to act as a global distributor and after-sales service provider for the brand’s sports cars, parts, and tools.

The SPAC, L Catterton Asia Acquisition Corp, raised USD 287m, including overallotment, in March 2021. The sponsor entity is a portfolio company of the private equity firm’s third pan-Asian fund. The SPAC’s brief was to target high-growth consumer technology assets within the region.

Chinta Bhagat, co-CEO of the SPAC and Asia managing partner at L Catterton, noted in a statement that the global EV market is expanding rapidly and the luxury segment is growing at a faster pace than the broader industry. China, the EU, the UK, and the US are expected to be the key markets over the next decade, supported by strong policy support.

"Lotus Tech is well positioned to benefit from these dynamics, as it is a pioneer in the decarbonisation of luxury automobiles and its management team and R&D experts have demonstrated that they have the ability to lead the energy transition in the company's target segment and geographies,” Bhagat added.

Geely, Etika, and, Nio Capital and other existing investors will hold approximately 89.7% of the merged entity. The SPAC investors and SPAC sponsor will own 4.7% and 1.2%, respectively, while Jingkai Fund, which appears to be a local government-related investment vehicle, will have 2.8%. A further 1.6% has been earmarked for third-party investors, given plans to source USD 100m from PIPE investors.

The USD 5.88bn in proceeds, including USD 5.5bn in existing investor equity, USD 288m from the SPAC, and USD 100m from the proposed PIPE placement, is intended to leave Lotus Tech with balance sheet cash of USD 335m. This assumes zero redemptions by SPAC investors – who can exercise warrants and purchase shares or redeem some of their shares for cash on completion.

Lotus Tech is projecting sales of 22,000 units in 2023 and 76,000 units in 2025, according to an investor presentation. By then, China is expected to account for 45% of sales. Revenue is expected to rise from USD 2.2bn-USD 2.5bn in 2023 to USD 8.5bn-USD 8.9bn in 2025. Over the same period, gross profit will increase from USD 300m-USD 400m to USD 1.8bn-USD 2bn.

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• Topics
• Greater China
• IPO
• Consumer
• Cleantech
• China
• Asia
• L Catterton
• Electric Vehicles
• SPAC