Fast Radius Inc. has reached a deal with a special-purpose acquisition company that values the digital manufacturing company at about $1.4 billion and will take it public, the companies said.
Backed by investors including
United Parcel Service Inc.,
Fast Radius uses a cloud-based software platform and manufacturing techniques including 3-D printing to make unique parts, accelerating product and supply-chain development for customers. Its other partners and customers have included household products seller
and the baseball glove maker Rawlings.
Fast Radius also works with other companies in the sector such as 3-D printing technology firm Carbon to produce parts.
Chicago-based Fast Radius is combining with the green-focused SPAC ECP Environmental Growth Opportunities Corp. The Wall Street Journal previously reported that the two sides were nearing an agreement.
The company would join many others tied to technology and manufacturing that are going public by combining with SPACs. These companies are attracting investors who see huge growth potential as large corporate customers aim to speed up innovation, simplify supply chains and bring down emissions.
“This is a massive market that is ready for meaningful investment and innovation,” Fast Radius Chief Executive Lou Rassey, a former partner at consulting firm McKinsey & Co., said in an interview. “We see this transaction as an opportunity to really aggressively scale.”
On Friday, Fathom Digital Manufacturing Corp. unveiled a roughly $1.4 billion SPAC deal. Other companies in the space to agree to SPAC mergers in recent months include
Desktop Metal Inc.,
Velo3D Inc., Bright Machines, Markforged and Shapeways.
Two other publicly traded companies tied to modernizing manufacturing—
—have been among the stock market’s most popular names at times in the past year, though their shares have fallen lately.
Wall Street’s excitement about the sector and future technologies is letting many of these companies go public with high valuations and raise cash to invest in their businesses. Fast Radius is projected to post about $25 million in sales this year. It is expected to generate about $445 million in its SPAC deal from the money held by the so-called blank-check company and a $100 million private investment in public equity, or PIPE.
The PIPE features a forward-purchase agreement with Goldman Sachs Asset Management LP, and investments from UPS and data-mining software company
Palantir Technologies Inc.
SPAC mergers have become common alternatives to traditional initial public offerings or additional private fundraising rounds for companies such as digital manufacturers in recent months, in part because they let the startups make future projections. Those aren’t allowed in an IPO.
A SPAC is a shell company that lists on an exchange with the sole intent of combining with a closely held company to take it public. The private company then gets the SPAC’s place in the stock market. Proponents of blank-check deals say they are more efficient for fast-growing companies, but skeptics warn that they can benefit SPAC creators and stick individual investors with losses due to the large amount of shares and other investments given to insiders.
The ECP SPAC is backed by the private-equity firm Energy Capital Partners and raised $345 million in February. Energy Capital Partners was founded in 2005 by
a former Goldman Sachs Group Inc. investment banker who focused on the energy and utility sectors.
Many investors focus on renewable projects, underappreciating the climate benefits from industries like manufacturing becoming more energy efficient and producing parts locally, Mr. Kimmelman said.
“This is a sector that can take a leadership role,” he said.
SPACs have raised a record of roughly $115 billion this year, according to data provider SPAC Research, but fundraising has slowed in recent months as shares of some companies that went public via SPACs struggle and regulators increase their scrutiny of the sector.
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