Financial market watchers with a dual passion for motor racing were in for a treat on Thursday when the legendary driver Michael Andretti Issues an initial public offering of $200 million for his latest venture, Special Purpose Acquisition Company Andretti Acquisition Corp. (NYSE: WNNR) (NYSE: WNNR.U). Andretti’s famous father, Mario Andretti, works as a “special advisor” at the new SPAC.
Benzinga spoke with Michael Andretti and his co-CEO on this endeavor, Bill Greenwood, former CEO and President American Concreteand its financial manager Matt Brown About the goals of SPAC.
Q: When did you come up with the idea of creating SPAC, and why did you create SPAC?
Michael Andretti: That was probably about a year and a half ago. I was looking back at the time when Spax was crazy, and I felt like we had a lot to offer.
Number one, we have our brand. Number two, we have many, many contacts around the world within the space. And also, we have a lot of knowledge in the field — we’ve been in the sustainability space with the Formula E team and the Extreme E team. Also, we own 100 gas stations on the West Coast, and we’re doing some work on hydrogen.
And so the idea came to me. The first person I called was Bill because I’ve known Bill since I was seven – we’ve been friends for 50 years, and my next-door neighbor was. We started developing a relationship within the company when his company, US Concrete, was sponsoring my son Marco’s race car. I felt like I needed someone who understood the general side of things, and Bill was a perfect guy.
It’s been really cool since we started this – and fun!
Q: It seems that for every IPO, there are countless SPACs putting companies out to the public. Why did the SPAC environment get such enthusiasm?
Matt Brown: One factor was definitely COVID-19 and all the market volatility that came with that in the beginning. With an IPO, when a company goes public, they are subject to market fluctuations in terms of valuation – they don’t know what even the prices of the IPO will actually be. With a SPAC merger, they can negotiate the price at which they sell the company, so there is a lot of certainty about valuation, and they leave less money on the table.
From a seller’s point of view, I think that’s why a lot of companies have been looking at these SPACs rather than doing an IPO.
Q: What kind of companies are you looking for to participate in the specification?
Matt Brown: We’re looking at the entire commuting space, and that’s everything from electric to autonomy to some of the more traditional sectors like auto service and retail, as well as luxury, high performance and racing parts in the sector. Overall, the total addressable market size is nearly $3 trillion with more than 4,000 companies.
It’s a big sector with a lot of opportunities, and we have over 40 potential targets on our list right now.
Michael Andretti: They approached us – we didn’t even begin to look on our own.
Q: What do you look for in a company? How do you determine the winner?
Michael Andretti: First of all, the team that runs the company. It will be very important to know that they have good leadership. Obviously we’re looking at the product, and what kind of potential it has.
Matt Brown: In addition, we are looking for a company that meets market needs that other companies have not. We are looking for a company that has a strong management team and barriers to entry. And to the extent that it makes a profitable company, we look for companies that have custom orders.
Bill Sandbrook: It is critical that we offer what other SPAC companies do not: Our group of sponsors and our board of directors can add value after the de-SPAC merger, which means that Matt and I can help them out in public and – to the extent appropriate to the company we merge with – mark Michael’s business, networks and access to tests on the racetrack.
We want to make sure that the company is very successful and that everyone makes money at de-SPAC.
Q: Are you looking for private companies in the United States? Or are you open to partnering with companies from all over the world?
Matt Brown: We are open to partnering around the world, but we are really focused on the US and Europe.
Q: In your opinion, how are the US and European markets different?
Matt Brown: In terms of electricity, Europe is ahead of the United States. But there may be more upside potential in the US as adoption occurs. Right now, US electricity sales are low in percentage terms, so there’s a lot of upside there.
Q: The markets you focus on have had a good time now with supply chain hiccups. Do you see that this will continue until 2022 and maybe even 2023?
Bill Sandbrook: With chips in short supply, because the number of chips required in these vehicles is so great that I think there will be a negative impact on that by 2023. I think a lot of other supply chain issues, whether it’s transportation, logistics, unloading, shipping foreign goods at ports It will make its way out. But the chip issue is a real problem.
Q: When do you expect to announce a partnership? Are you waiting for the right 100% company?
Matt Brown: We won’t wait – we have 18 months to close the acquisition. We have the ability to pay a fee to extend this to a total of 24 months. But usually, there will be at least three or four months between acquisition and closing. So, we need to get to the ad fairly quickly – but we’ll be very meticulous in our judgment.
Q: If we want to start this conversation a year from now, where do you see yourselves?
Michael Andretti: I would say we have bought a company that we are trying to build and make it better than it is now. This is our goal.
SEE ALSO: Tiger Woods, Caroline Wozniacki, David Lee, Michael and Mario Andretti are among the newest athletes to join the Spax
Photo: (from left) Marco Andretti, Bill Sandbrook, Mario Andretti, and Michael Andretti meet the crowd at Rockefeller Center in New York City. Image via Andretti Acquisition Corp.
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