PACCAR Inc. and Volvo Group are among the investors in a special purpose acquisition company (SPAC) that seeks to take Aurora Innovation, a self-driving technology business, public for a $10.6 billion enterprise valuation, the second-highest of four startups looking to go public.
According to an investor presentation, Aurora will work with PACCAR (NASDAQ: PCAR) companies Kenworth Trucks and Peterbilt Motors, as well as Sweden’s Volvo Group, to have autonomous trucks on the road before ride-hailing robo-taxis.
By the end of 2023, the business hopes to have its first Aurora Driver-equipped high-autonomy Level 4 vehicle on the road. If the schedule holds, it will beat rival TuSimple Holdings (NASDAQ: TSP) and TRATON Group’s Navistar International’s projected Class 8 autonomous truck introduction in 2024.
Who Will Be The First To Commercialize?
“Based on its industry-leading team, technology, and partnerships, we believe Aurora will be the first to commercialize self-driving technology at scale for the U.S. trucking and passenger transportation markets,” said Mark Pincus, co-founder and director of Reinvent Technology Partners Y, which announced a definitive business combination agreement with Aurora on Thursday.
“Based on its industry-leading team, technology, and collaborations, we believe Aurora will be the first to commercialize self-driving technology at scale for the US trucking and passenger transportation sectors.”
Reinvent Technology Partners co-founder and director Mark Pincus Y
Only Google-backed Waymo and Kodiak Robotics remain as prominent companies in autonomous trucking without an explicit path to public ownership after Aurora’s decision. Waymo just raised $2.5 billion in new funding from current investors for its self-driving car and Waymo Via truck businesses. Bridgestone America, a tire manufacturer, made an undisclosed investment in Kodiak.
Reinvent SPAC (NASDAQ: RTPY) consists of $977.5 million raised in an initial public offering to form the shell company that would become Aurora Innovation Inc., a $1 billion private investment in public equity (PIPE), and around $600 million in cash on Aurora’s books.
When the company combination happens in the second part of this year, Aurora is likely to receive around $2.5 billion. The implied market valuation of the combined business would be $13 billion if no PIPE investors sell their shares. The enterprise value of $10.6 billion is based on 5.3 times projected sales in 2027.
Last month, Embark Trucks, the first autonomous truck to cross the United States in 2018, agreed to a $4.55 billion SPAC merger with Northern Genesis Acquisition Corp. Plus and Hennessy announced their SPAC merger in May, with a combined enterprise value of $2.47 billion. TuSimple went public through a typical IPO in April. It is currently valued at $10.9 billion.
Following the SEC’s advice
Reinvent and Aurora appear to be paying attention to SEC concerns regarding SPAC sponsors, who typically receive 20% stock in exchange for a “promote” fee that can be sold in as short as a year.
Reinvent will have a lesser share in the company. Existing Aurora shareholders keep 84 percent of the premerger equity, and 75 percent of the founders’ shares vest when the $15, $17.50, and $20 share price targets are met.
Reinvent committed to a four-year lockup of their founders’ shares, led by online games developer Zynga founder Pincus, managing partner Michael Thompson, and LinkedIn co-founder Reid Hoffman. Hoffman recused himself from the SPAC deliberations because he is an Aurora investor and director.
Aurora was founded in 2017 by Chris Urmson, Sterling Anderson, and Drew Bagnell, all of whom have experience in autonomous driving technologies. Along with Aurora directors and “some substantial current investors,” they agreed to share price vesting and a four-year lockup, according to an Aurora press release.
Hoffman, Pincus, and Thompson, PIPE investors, put $75 million into the PIPE. Baillie Gifford, Counterpoint Global (Morgan Stanley) funds and accounts, T. Rowe Price Associates Inc., PRIMECAP Management Co., XN, Fidelity Management and Research LLC, Canada Pension Plan Investment Board, Index Ventures, and Sequoia Capital were among the other investors.
Amazon was an investor in Aurora’s $530 million Series B capital investment in February 2019, which was led by Sequoia Capital. Plus, an Aurora competitor and Hennessy’s sixth SPAC, recently pledged to buy up to $150 million in autonomous driving systems from Amazon. Amazon may be granted a warrant to purchase up to 20% of Plus.
In a blog post on Aurora’s website, Sequoia partner Carl Eschenbach said, “Since the outset, Sequoia has regarded our collaboration with Aurora as an opportunity to assist an extraordinary team producing revolutionary technology and leading the next dramatic change of transportation.”
“We know that autonomous vehicles will radically impact the lives of people all across the world, just as the first automobiles did more than a century ago.”
In exchange for taking over Uber’s ride-hailing autonomous car section last December, Uber, along with PACCAR and Volvo Group, purchased a 26 percent stake in Aurora. Aurora was valued at $10 billion at the time based on the purchase. Aurora also has an autonomous passenger vehicle mobility collaboration with Toyota.
Articles that are related:
Aurora Innovation is rumored to be next in line for SPAC.
Amazon might buy 20% of Plus for $150 million in autonomous systems.
Embark Trucks is the newest addition to the SPAC procession of autonomous testing pioneers.
Alan Adler’s FreightWaves articles can be found here.
Pixabay image courtesy of Free-Photos/n
