Electric-vehicle maker, Faraday Future will soon become a publicly-traded company when its merger with Property Solutions Acquisition Corp scales through all regulatory issues and both parties agree on terms. The net worth of the combined new entity is estimated to be around $3.4 billion, and Faraday now joins the group of electric vehicle companies that have been involved in a merger or acquisition, as they shore up their potentials for greater profit-making.
Faraday Future may still be far from the heavy hitters in the industry like Tesla, but it is indeed growing at an explosive pace, drawing attention from investors and automakers who are rushing to tap the initial public offering (IPO).
Other prominent players in the EV sector like Fisker Inc and Nikola Corp had also gone public through mergers using the special purpose acquisition companies (SPACs) model in 2020.
In a statement on Thursday, Faraday and Property Solutions said that the deal is supported by a private investment of $775 million, and is expected to yield for Faraday Future about $1 billion in gross proceeds.
Some inside sources say that Chinese automaker Geely is the anchor investor in the private placement. In addition, Faraday plans to set up a base in China and interface with Geely for contract manufacturing services.
SPACs have been a very popular model for companies going public in recent times, partly because of little regulatory scrutiny and greater certainty about valuation, unlike a conventional IPO.
The SPAC, Property Solutions is a shell company tasked with raising money through the IPO within two years. In 2020, Property Solutions raised about $200 million in its own IPO.
The combined company is expected to be listed on NASDAQ with the ticker “FFIE”, according to the joint statement by both companies.
This investment is a major boost for Faraday Future which was founded by former LeEco boss Jia Yueting. The investment led to the eventual collapse of the once boisterous LeEco empire and left Jia filing for bankruptcy in China.
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