Apollo-Backed Blank-Check Company Surges 71% on Possible Fisker Deal

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The allure of electric vehicles is boosting shares of blank-check companies, the latest being Apollo Global Management-backed Spartan Energy Acquisition Corp.

Spartan Energy became something of an overnight sensation Thursday after Reuters reported that it was leading a bidding war for carmaker Fisker Inc. Spartan’s stock has now gained as much as 71% in the course of two trading sessions, pushing its market value above $1 billion for the first time and mirroring the meteoric rise of Nikola Corp.

Nikola, the semi-truck maker, listed on the Nasdaq following a reverse merger with a special purpose acquisition company, or SPAC, last month. Spartan Energy’s ticker symbol is SPAQ.

It’s not unusual for a blank-check company to rally on the announcement of a business combination. A SPAC is effectively a capital-raising vehicle that goes through an initial public offering for the express purpose of buying an existing company. Lately, they’ve become a popular way for private companies to go public, sidestepping a lengthy registration process and share sale.

After a SPAC raises money through its IPO, that cash is injected into a private company under a merger. So when a deal target is identified, investors often bid up the shares of the SPAC in anticipation of unlocking value when they are united.

Beyond the early exuberance over Spartan Energy, it’s unclear to what extent a case of mistaken identity could be coming into play. Fisker is veteran car designer Henrik Fisker’s second attempt at forming an electric-vehicle company to compete with the likes of Tesla Inc. His first venture, Fisker Automotive, filed for bankruptcy in 2013, costing U.S. taxpayers $139 million. That company was acquired the following year by Chinese auto-parts maker Wanxiang Group and renamed Karma Automotive.

Fisker announced earlier this week that it raised $50 million from Moore Strategic Ventures, the private investment vehicle of hedge fund manager Louis Bacon, with the money going toward engineering for the SUV it aims to roll out in 2022.

©2020 Bloomberg L.P.

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