Polestar raising over $1.2bn in stock listing this week

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Polestar 2 BST 4

Polestar is due to complete merger with SPAC Gores Guggenheim ahead of trading beginning on Friday.

Volvo-controlled EV brand Polestar will go ahead with its stock listing in the US via the special purpose acquisition company (SPAC) method this week, despite a sustained decline in share values for EV start-ups.

The brand will merge with SPAC Gores Guggenheim, which has already been already listed on the stock market in advance. It expects to begin trading under the PSNY ticker on Friday 24 June.

Polestar O2 2

The listing will hand Polestar $850 million (AUD$1.234 billion) from investors, giving it crucial development cash as it expands beyond its single model, the Polestar 2.

Polestar will launch the 3 sports SUV in October, which it calls a Porsche Cayenne rival, and will follow that up with the Polestar 4, a coupe-styled SUV described as a competitor to the Porsche Macan, the company said in a May investor presentation.

The Polestar 5 GT will follow in 2024 after being previewed by a prototype at this weekend’s Goodwood Festival of Speed.

In total, Polestar targets sales of 290,000 by 2025 with four models, up from 29,000 sales of one model in 2021.

The company brands itself as the only other global “pure-play” EV brand after Tesla.

The listing will float only 6 per cent of Polestar’s stock, with the remainder being held by Volvo, Volvo parent company Geely Holding and Hollywood star Leonardo DiCaprio, an early investor.

The listing allows Geely to sell more stock if it thinks the share prices are strong enough.

Shares of EV start-ups that took off when listed 2020 and 2021 have since plummeted from their peak.

Polestar O2 11

Examples include Rivian, which has fallen 82 per cent from its peak value of $127.3 billion, start-up Arrival, down 93 per cent, and people-carrier hopeful Canoo, down 82 per cent.

Polestar is betting that investors will back it for being a company with established sales, revenue and production, the latter provided by Geely’s network of plants.

Many SPAC EV companies have limited or no revenue and are now struggling for cash as investment streams have dried up.

The SPAC method avoids the tougher scrutiny of the traditional initial public offering (IPO), although the US regulator the Securities and Exchange Commission has started to clamp down on the wilder claims of future growth made by companies that list as a SPAC .

Gores Guggenheim pointed to the fact that only 25 per cent of the original investors opted to redeem their cash when the two companies are combined. Redemptions from recent SPAC listings have been much higher.

Nick Gibbs

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