Can't spell Space without SPAC (and Sir Richard Branson)
The Nightcap newsletter: SPAC Track’s nightly recap of the action in the SPAC world. (August 23, 2021)
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Today, Virgin Orbit announced a merger deal with NextGen Acquisition Corp. II (NGCA: $9.86). This is the second company from Sir Richard Branson to SPAC— the first being Virgin Galactic (SPCE: $25.44), which completed its merger with Chamath Palihapitiya’s Social Capital Hedosophia in late 2019.
Branson has also launched a couple of SPACs of his own: VG Acquisition Corp, which completed its merger with 23andMe (ME: $8.29) in June, and another one that IPO’d in March and is searching for a target.
As he has tackled both the buy and sell-side of the SPAC transaction, all that is left is to get a piece of the underwriting fees. I’m looking forward to the announcement of the next venture to come out of Branson’s camp, Virgin Sachs.
The sun is shining a little more on De-SPACs to kick off the week… As of today, there are 110 De-SPACs completed year-to-date with 30% trading above their $10 IPO price. That number was 24% last week.
The average return among De-SPACs (common shares only) completed YTD is -6.3%. The top performer, Stem (STEM: $23.70), is up 135% while the bottom is Ensysce Biosciences (ENSC: $3.16) at -68%.
The Stats:
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The Deals (1):
1) NextGen Acquisition Corp. II (NGCA: $9.86) & Virgin Orbit
Merger Partner Description:
Virgin Orbit builds and operates one of the most flexible and responsive satellite launchers ever invented: LauncherOne, a dedicated launch service for commercial and government-built small satellites. LauncherOne rockets are designed and manufactured in Long Beach, California, and are air-launched from a modified 747-400 carrier aircraft, Cosmic Girl, which allows Virgin Orbit to operate from locations all over the world in order to best serve each customer’s needs.
In just a span of four years since its creation in 2017, Virgin Orbit has developed a proprietary air-launch technology, coupled with world-class manufacturing infrastructure and a proven team to transform space access for a diverse and global customer base.
Valuation: $3.22B EV
PIPE: $100M fully-committed PIPE led by strategic and institutional investors including Boeing and AE Industrial Partners, in addition to existing Virgin Orbit investors and NextGen
The Hippo in the room: How the insurtech unicorn lost half its value in two weeks (Calcalist)
Hippo (HIPO: $3.99) suffered another hit following the release of its first results as a public company last week. The company's share price dropped by 15% despite the firm's announcement that it had crossed $500 million in total generated premium in force in Q2 of 2021 and year-one customer retention grew to 88%. The home insurer saw its total amount of generated premium increase by 101% to $159 million. However, of the $501 million generated, only $21 million was ultimately reported as revenue. The company's Gross Loss Ratio in the second quarter of 2021 was 161% compared to 106% in Q2 of 2020, far from the 60% it said it was targeting when it went public.
Hippo explained that severe hail storms in parts of Texas, where 19% of the company's clients are located, hurt its bottom line with Q2 residential cat losses in Texas being the third-highest reported in the past 24 years.
That also contributed to a Net Loss of $84.5 million in the quarter compared to just $24.8 million over Q2 of 2020. This also led to an Adjusted EBITDA Loss of $42.3 million in Q2, an increase of $23.5 million compared to last year. That was also partially the result of a jump in the company's operating expenses, which increased 54% from the prior year to $47 million. Headcount growth contributed to increases in all major categories, with Hippo now employing 603 people, up 117% from 278 last year.
Wand, nevertheless, remains extremely optimistic. “We will drive growth and focus on bottom-line metrics as we grow. We will carefully deploy the more than $900 million that we have on our balance sheet, to enhance our product offering and our growth, in order to become a leader in this industry,” said Wand during last week’s earnings conference call. “Home insurance is a vast, $110 billion industry, and we, at Hippo, have now crossed the $500 million mark. While this is a great milestone for the company… We are just beginning.”
Quick News Corner:
RMG Acquisition Corporation II (RMGB: $8.85) completes business combination with ReNew Power. Set to trade as RNW tomorrow
LIV Capital Acquisition (LIVK: $10.40) completes business combination with AgileThought. Set to trade as AGIL tomorrow
Navitas Semiconductor and Live Oak II Acquisition Corp. II (LOKB: $9.92) Announce Additional PIPE Investment and Up to 2mm-Share Redemption Backstop In Connection With $1.04 Billion SPAC Business Combination
New S-1s (1):
1) Direct Selling Acquisition Corp. (DSAQ)
$200M, 1/2 warrant
Focus: Direct selling industry in the US
Upcoming Dates:
This Week’s Announced Shareholder Meetings, Unit Splits, Warrant Redemptions
Tues, August 24
Merger Meetings:
Alpha Healthcare Acquisition Corp. (AHAC: $10.19) & Humacyte
Locust Walk Acquisition Corp. (LWAC: $9.25) & eFFECTOR Therapeutics
Warrant Redemption: QuantumScape (QS: $20.59)
Wed, August 25
Merger Meetings:
Good Works Acquisition Corp. (GWAC: $9.94) & Cipher Mining
Tortoise Acquisition Corp. II (SNPR: $9.05) & Volta
Thurs, August 26
Merger Meeting: LGL Systems Acquisition Corp (DFNS: $9.64) & IronNet
Fri, August 27
Merger Meetings:
Blue Water Acquisition Corp. (BLUW: $10.16) & Clarus Therapeutics
TWC Tech Holdings II Corp (TWCT: $9.97) & Cellebrite
Thanks for reading,