Electric vehicle company Arrival (ARVL) has staged what is believe to be the biggest ever stock market listing for a UK tech company.
Arrival completed its merger with SPAC company CIIG Merger Corp on Thursday. The closing of the deal mean Arrival is now listed on the Nasdaq (^IXIC) in New York under the ticker ARVL. Arrival's stock was listed at $22, valuing it at roughly $13bn (£9.5bn) when the deal closed.
"It feels great," Avinash Rugoobur, Arrival’s president and chief strategy officer, told Yahoo Finance UK. "It’s a huge moment for the company, the 1,600+ employees we have — everybody’s contributed towards that for many, many years a lot of hours, as you can imagine."
Arrival was founded in 2015 and is based between Bicester, England, and London. The company has developed new methods of building electric vehicles through so-called "microfactories" that are much smaller than traditional manufacturing bases. The company has designed its own sustainable and cheap material to construct vehicles and recycles parts.
"We’re not just repeating what’s been done in the industry and the legacy before, we’ve rethought how the industry should work using the latest technology and even pioneered our own," Rugoobur said.
The hefty price tag makes Arrival the biggest UK tech listing in history, according to the company's representatives. Recent notable UK tech floats include e-commerce company The Hut Group (THG.L), which was valued at £5.4bn ($7.4bn) in a London IPO last year, and online card retailer Moonpig (MOON.L), which went public at a £1.2bn ($1.4bn) valuation earlier this year. Deliveroo is currently preparing to list in London and could be valued at up to £8.8bn ($10bn).
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"The valuation’s great," Rugoobar said. "It’s a testament to the market validating what we do and how we do it. But more importantly we can never take our eye off what got us there in the first place — that’s a focus on the team and the culture and its a focus on the technologies and its producing the right products for our customers.
“At the end of the day, [customers] are the biggest validator of Arrival’s journey to date."
Arrival was originally valued at $5.4bn when the SPAC deal was announced in November. Michael Ableson, Arrival's chief executive of automotive, said the change in value reflected "some significant milestones in just those few months." In recent weeks, the company has announced trials of its electric bus with FirstGroup (FGP.L) in the UK, trials of its new electric van with UPS (UPS) in the US, and a new "microfactory" in Charlotte, North Carolina.
"Obviously the market is very interested in electric vehicles," Ableson said. "On our side, we’ve also been showing consistent progress towards starting production."
Arrival raised around $660m through the SPAC deal and plans to use the proceeds to build more microfactories around the world and ramp up delivery of its electric vans.
Shares dipped 6.5% on Thursday to trade near $20.50. The broader Nasdaq index was down just a fifth of a percent. The slip took Arrival's market value down to nearer $12.3bn.
"The share price will be market driven," Rugoobar said, speaking ahead of the listing. "It doesn’t matter if its Arrival or Tesla or Google or any industry for that matter — it’s going to have times where its up and down. That part is not fully in our control so we focus on what we can fully control. And I firmly believe that if we do that, the share price will be where it needs to be."
Arrival's decision to list in the US rather than the UK was a blow for Britain, which has struggled to retain tech talent for years. UK chancellor Rishi Sunak recently announced stock market reforms intended to attract more tech to the London market.
Rugoobar said there were "many great reason to be in the UK as a tech company" and said the government's proposed stock market reforms would help make the country a more attractive place for tech businesses. Rugoobar said Arrival remained committed to the UK.
“Headquarters and R&D activity is predominantly driven out of the UK, the majority of our staff are in the UK, the first trial that we’re doing for the bus is with FirstGroup in the UK," he said. "It will always be the centre of the majority of our activity."
He said the decision to list on the Nasdaq was driven in part by a desire to establish a foothold in the US and in part because the SPAC Arrival merged with was based there.
“We chose this for some very specific reasons, one of which was the partner that we had in CIIG," he said. "They believe in our long term vision and they’re bringing a lot to the party."
Peter Cuneo, CIIG's chairman and CEO, will stay on as chairman of Arrival. Cuneo previous led Marvel Comics, where he led a ten year turnaround of the business that culminated in a $4bn sale to Disney (DIS).
Arrival is one of a number of European tech companies to opt to go public via a SPAC deal in the US, after a boom last year in listing these "blank cheque" companies. Israeli stockbroking business eToro recently announced a $10.4bn SPAC deal to list on the Nasdaq and UK payments business Paysafe is heading for a $9bn SPAC listing.
"We anticipate further Europe-based companies will seek out the SPAC route via the US in upcoming quarters," said Nalin Patel, an EMEA private capital analyst at PitchBook. "SPAC activity exploded in the US in 2020 and we expect exits via this strategy to spread quickly across Europe in 2021."
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