On the same day that electric truck maker Rivian closed its first day as a public company with an $86 billion valuation, autonomous trucking startup Embark Trucks concluded its SPAC merger valued at $5 billion.
But early investors redeemed nearly 30 million shares, cutting Embark’s proceeds by about $300 million. It was a similar story a week ago when Aurora Innovation (NASDAQ: AUR) went public. Early redemptions cut is SPAC proceeds by $755 million from an expected $1.9 billion.
Still, Embark, which will ring the bell to open Nasdaq trading on Thursday, will have about $314 million from what remains of the trust created by its SPAC sponsor Northern Genesis Acquisition Corp. (NGAB II) and $200 million raised from private investment in public equity (PIPE).
PIPE investors purchased shares for $10 each plus a warrant worth one-sixth of an additional share that can be purchased for $11.50.
On its last day of trading, NGAB II (NYSE: NGAB) closed at $9.93 on volume that was about a quarter of its average daily trading. NGAB is giving up its seat on the New York Stock Exchange as Embark Technology Inc. begins public life on the Nasdaq under the ticker EMBK.
Heavy redemptions becoming common
In an 8-K filing with the Securities and Exchange Commission, Northern Genesis said investors redeemed 29,986,289 shares and will receive approximately $299,884,977 from the trust account.
“Generally, as you look across the SPAC market, there’s 70% to 80% redemptions in many cases. That’s what I’m being told by the experts who are following this space,” Don Burnette, founder and CEO of competitor Kodiak Robotics, told FreightWaves. Kodiak, which announced a $125 million capital raise Wednesday, decided against pursuing a SPAC.
Embark, which in 2018 became the first autonomous trucking software company to complete a cross-county autonomous journey, has 14,200 nonbinding reservations for its Embark Universal Interface, a self-driving software package that can be incorporated in International, Freightliner, Volvo and Peterbilt trucks.
“We are thrilled to reach this important milestone and become a public company to further our mission of evolving the trucking industry, and using autonomous software to create a safer, more efficient, and more sustainable freight ecosystem,” Embark co-founder and CEO Alex Rodrigues said in a press release.