Online car seller Cazoo is set to list on the New York Stock Exchange (NYSE) through a special-purpose acquisition company (SPAC), after securing a $7bn (£5bn) deal.
This is more than double the $2.6bn valuation in its private funding round in October.
The move, which will see the British firm merge with Ajax I, is expected to provide Cazoo with up to $1.6bn in funding to bolster its operations across Europe.
Ajax I is led by billionaire Dan Och, who will join the company’s board.
It currently employs more than 1,800 staff members in the UK, Germany, France and Portugal, and has delivered more than 20,000 cars to consumers across the UK.
The deal will also deliver a windfall of $1.35bn for shareholder Daily Mail and General Trust (DMGT.L), owner of the Daily Mail, which invested £117m in the firm giving it an approximate 20% stake.
Shares in DMGT rose more than 10% on the back of the news.
Cazoo, which was established in 2018 by chief executive Alex Chesterman, has been described as the “Amazon (AMZN) of the used car market.” It owns and reconditions all its cars before offering them for sale on its website for either delivery or collection in as little as 72 hours.
The company said that it expects to report revenues of up to $1bn for this year, representing a 300% jump in comparison to the year prior as the pandemic exacerbates the shift to online platforms.
“This announcement is another major milestone in our continued drive to transform the way people buy cars across Europe,” Chesterman said.
“We have created the most comprehensive and fully integrated offering in the largest retail sector which currently has very low digital penetration.”
Meanwhile, Paul Zwillenberg, chief executive of DMGT, said: "This is another great example of DMGT's ability to identify and support disruptive early-stage businesses led by entrepreneurial management teams.
“Our strategy gave us confidence in our portfolio and the financial flexibility to invest in Cazoo, including leading a funding round in March 2020 at a time of global uncertainty. We are delighted by the rapid progress the business has made and the capital appreciation on our £117m investment."
Cazoo is the latest company to take advantage of a growing SPAC trend.
Known as “blank cheque companies,” SPACs are essentially empty cash shells — companies with no operations that are created simply to hold investor money and then spend it.
Management try to identify a company or assets to buy, thus giving the SPAC stake inherent value.
SPACs typically target deals to take private companies public. The benefit for companies that get acquired is it can be a quicker and easier way of listing on the stock market.
Notable examples of companies that have gone public through SPACs include Nikola (NKLA), DraftKings (DKNG), and Virgin Galactic (SPCE). Social Capital founder Chamath Palihapitiya is the best known SPAC "sponsor," as founders of the vehicles are known.
Cazoo’s decision to make its market debut in New York comes as a blow to the London Stock Exchange (LSE), which was believed to have lobbied for the business to list in its home market.
The UK government is looking to update current listing rules to attract more startups to float in London amid concerns that Britain is falling behind other international markets, notably the US.
Earlier this month, Miles Celic, chief executive of lobby group TheCityUK, said: “The UK has one of the world’s foremost listing regimes, but we cannot be complacent in the face of fierce competition from the US and increasingly from financial centres in Asia.
"We must strive to be at the forefront of global trends and standards."
Watch: What are SPACs?