Lotus Tech will go public via SPAC at $5.4B valuation

Lotus Technology, the electric vehicle division owned by China’s Zhejiang Geely Holding Group, has agreed to merge with Blank Check Company in a deal valued at about $5.4 billion.

L Catterton Asia Acquisition will be merged with the EV manufacturing subsidiary of the auto manufacturing group Geely acquired in 2017, the two said on Tuesday.

The sponsor of the special purpose acquisition company is associated with the richest man in the world, Bernard Arnault.

Lotus Tech has been aiming to go public since at least the beginning of last year. Management may have been encouraged by the recent listing of another luxury car brand. Porsche completed Europe’s largest successful initial public offering in a decade when it debuted in Frankfurt in September.

A week later, Porsche overtook the Volkswagen Group to become Europe’s most valuable automaker.

Rather than go down the IPO road, Lotus Tech plans to merge with SPAC in 2016, which sponsors Arnault’s luxury goods giant LVMH’s private equity business.

LVMH is a passive minority shareholder in L Catterton, according to a spokesperson.

Arnault surpassed Tesla CEO Elon Musk to become the world’s richest man last month. It’s the first time a European has topped the Bloomberg Billionaires Index.

While the Lotus group is small compared to Tesla, Geely has moved away from combustion engines and plans several fully electric models in the next few years.

Lotus Tech sees itself as a rival to the likes of Ferrari and Aston Martin and will jump on those brands’ new fully electric vehicles.

Lotus unveiled the Eletre, a full-electric SUV last year, and plans to launch a rival to Porsche’s popular Taycan EV in 2023.

Geely and other owners intend to retain an 89.7% stake in Lotus Tech after the SPAC merger.

Geely’s billionaire owner, Li Shufu, also controls Swedish automaker Volvo Car and owns stakes in Germany’s Mercedes-Benz and Britain’s Aston Martin.

Deutsche Bank advised Lotus Tech on the transaction, and Credit Suisse Group acted as SPAC’s capital markets advisor.

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