It has been announced that Wejo is to go public, and the deal values the auto data startup at $800 million. As part of an SPAC merger, Wejo, which collects and analyzes real-time vehicle data from a large number of sources, will go public for a total of $330M, which will value the company at $800M, including debt.
As part of the reverse merger deal that involves Virtuoso Acquisition Corp (VOSO.O) and Wejo, on Friday announced that the British startup will go public through a reverse merger for $800 million including its debt, the two companies said. The deal is backed by General Motors Co (GM.N).
According to the companies, the deal will result in $330 million in proceeds for Wejo. As part of this acquisition, a Special-Purpose Acquisition Company (SPAC) Virtuoso will commit $230 million and a Private Investment in Public Equity (PIPE) company will contribute an additional $100 million.
Despite the fact that PIPE is mostly made up of institutional investors, Wejo founder and CEO Richard Barlow declined to name which firms were involved in the PIPE. There is a possibility that an additional $25 million could be raised during the next month as discussions with other potential investors continue, he stated.
As part of the PIPE, Wejo and Virtuoso said their investors include the world’s largest automaker GM, which previously invested in the company, as well as Palantir Technologies Inc.(PLTR.N), the Seattle-based data management company co-founded by billionaire Peter Thiel. There was no information available regarding the size of their investments or stakes in the companies.
A reverse merger between Wejo and blank-check company Virtuoso Acquisition Corp (VOSO.O) is in the offing, according to two people familiar with the matter, which could value Wejo’s British connected car data start-up at over $1 billion, according to people familiar with the deal.
Based on the sources, who asked not to be identified, the deal has not closed yet, and terms could still change in the future.
Additionally, the sides have not reached agreement on how to raise funds from investors in order to fund the deal, the sources said. There is typically a significant need for this kind of funding, which is known as Private Investment in Public Equity (PIPE), in order for a special-purpose acquisition company, or SPAC, to complete an acquisition.
It was not possible to immediately reach representatives with Virtuoso and Wejo, which is backed by General Motors Company (GM.N), for comment on the issue. Virtuoso’s involvement in the project had been reported earlier by Bloomberg.
A shell company is a company that raises funds for the purpose of acquiring a private company for the purpose of taking it public later on. These shell companies allow such targets to bypass a traditional IPO and hit the public markets directly.
In March, sources told Reuters that the company hoped to achieve a valuation of more than $2 billion, which would be a step down from what it had been expecting in March.
Wejo has an enterprise value of about $800 million, which implies a pro forma equity value of approximately $1.1 billion.
Virtuoso CEO Jeffrey Warshaw said in an interview that the future of the company is in data and this company is sitting right in the middle of the incredible wave of data that is coming through the world shortly. “With all these opportunities for monetizing it, it seems like they are almost limitless.”
A deal with Virtuoso is expected to be completed in the second half of the year, the companies said in a statement. It has been decided that the new company will be referred to as WEJO, but the stock exchange has not yet been decided. It had been reported previously by Reuters that Wejo was in talks with Virtuoso about a possible merger.
It’s important to point out that SPACs are shell companies that are formed in order to raise capital to acquire a private company for the purpose of taking it public, which allows these targets to avoid entering the public markets through a traditional initial public offering (IPO).
According to sources who spoke to Reuters in March, Wejo was expecting a valuation of more than $2 billion when it hoped to raise more than $1 billion.
In recent months, the SPAC market has been cooling due to fears about frothy valuations, and last month the SEC published a letter suggesting that warrants issued by SPACs should be treated as liabilities rather than equity instruments.
GM, Hyundai Motor Co (005380.KS) and Daimler (DAIGn.DE) are just some of the clients who employ the services of Manchester-based Wejo in order to organize information received from almost 11 million vehicles that have been connected to the Internet through embedded modems.
Data collected from this connection can be used by automakers for the development of apps and services for fleets, smart cities and individual consumers, including mobile advertising, fleet management, insurance, remote diagnostics, roadside assistance, parking availability and traffic information, in addition to advertising.
According to Palantir global head of business development Kevin Kawasaki, getting the data-software piece right will be key in order to make the next best product in the future.
According to PitchBook, Wejo, which stands for “we journey,” was founded in 2014. Founded in 2014, it has raised almost $200 million in funding from a wide range of investors, including GM and Hella (HLE.DE) German auto suppliers, DIP Capital and the British government.
Selon Wejo, the market for connected vehicle data will be worth $500 billion by 2030, bringing with it the opportunity for automakers and their customers to generate revenue streams, as well as the possibility of enhancing product development efficiency for companies. ADEPT, the technology platform offered by Wejo, facilitates the organization of data collected in these vehicles through Wejo’s technology platform.
A SPAC merger between Wejo’s Israeli rival Otonomo and Software Acquisition Group Inc II is expected to take place on Feb. 1 following news that Otonomo is going public.