Exclusive: Lucid Motors nears SPAC deal as Klein launches financing

© Reuters. Lucid Air speed test car displayed at the 2017 New York International Auto Show in New York

By Joshua Franklin and Anirban Sen

(Reuters) – Luxury electric vehicle maker Lucid Motors Inc is getting close to a deal to go public at a roughly $12-billion valuation after veteran dealmaker Michael Klein’s blank-check acquisition firm launched a financing effort to back the transaction, people familiar with the matter said on Tuesday.

The merger between Lucid and Klein’s Churchill Capital IV Corp would be the biggest in a string of deals by electric vehicle makers such as Nikola Corp and Fisker Inc that have gone public by combining with special purpose acquisition companies (SPACs).

Churchill Capital IV has initiated talks with investors to raise more than $1 billion by selling shares in a private investment in public equity (PIPE) transaction for the deal with Lucid, the sources said. The size of the PIPE could reach $1.5 billion or more based on investor demand, one added.

These funds would be in addition to the $2 billion Churchill Capital IV raised in an initial public offering (IPO) in July on the New York Stock Exchange. Lucid and Klein agreed on the key terms of the deal, according to the sources.

If the PIPE fundraising concludes successfully, a deal could be announced as early as this month, according to the sources, who requested anonymity to discuss the confidential details. Churchill Capital IV declined to comment. Lucid did not immediately respond to a request for comment.

Churchill Capital IV’s stock spiked on the news and was trading up around 30% at $52.20.

Lucid, founded in 2007 as Atieva Inc by former Tesla (NASDAQ:) executive Bernard Tse and entrepreneur Sam Weng, makes luxury electric vehicles. It was funded initially by Chinese and Silicon Valley venture investors, with additional funding from backers like state-owned Chinese auto maker BAIC Motor and Chinese technology company LeEco.

To help fund construction of a U.S. assembly plant in Casa Grande, Arizona, Lucid was boosted by a $1 billion investment in 2018 by Saudi Arabia’s Public Investment Fund.

Churchill Capital IV’s share price has surged more than 300% since Bloomberg News reported in January that it was in talks to merge with Lucid.

SPACs likes Churchill IV are shell companies that raise money in an IPO to merge with a privately held company that becomes publicly traded as a result.

Merging with a SPAC has emerged as a popular IPO alternative for companies seeking to go public with less regulatory scrutiny and more certainty over the valuation that will be attained and funds that will be raised.

Investors keen on SPACs are on the hunt for electric vehicle startups, hoping to catch the next Tesla Inc. While some deals such as Fisker have delivered handsomely for SPAC investors, other such as Nikola have given up their short-term gains.

Klein has raised a string of SPACs which have done deals for companies including healthcare-services company MultiPlan Corp and analytics firm Clarivate Plc.