10X Capital Venture Acquisition Corporation
PROPOSED BUSINESS COMBINATION: REE Automotive
ENTERPRISE VALUE: $3.144 billion
ANTICIPATED SYMBOL: REE
10X Capital Venture Acquisition Corporation proposes to combine with REE Automotive Ltd., a horizontally integrated e-Mobility player targeting a $700 billion total addressable market, encompassing EVs ranging in size from Class 1 through Class 6, for commercial and Mobility-as-a-Service (“MaaS”) applications.
REE is revolutionizing the e-Mobility industry through its highly modular and disruptive REEcorner technology which integrates critical vehicle components (steering, braking, suspension, powertrain and control) into the arch of the wheel. REE’s proprietary x-by-wire technology challenges century-old automotive concepts by being agnostic to vehicle size and design, power-source and driving mode (human or autonomous). Platforms utilizing REEcorners can present significant functional and operational advantages over conventional EV “skateboards” currently available in the market.
REE’s innovative technology enables fully-flat and modular EV platforms that can carry more passengers, cargo and batteries as compared to conventional electric or internal combustion (IC) vehicles, thereby improving next generation e-Mobility for new electric and legacy OEMs, logistics companies and service providers. Compared to IC and electric vehicles, REE offers customers competitive pricing and substantially lower TCO with faster time-to-market.
REE targets commercial and MaaS markets, enabling them to build mission-specific electric vehicles as part of the shift towards electrification and autonomy. The shift is driven by the growth in e-commerce, government regulations on carbon emissions and public policy, as well as newly developed mobility concepts which require complete freedom of design for the build-out of any size or shape of electric or autonomous vehicle – from Class 1 through 6. For OEMs, incorporating REEcorner technology into EV product portfolios enables fast and efficient entry into EV markets. Mobility service providers such as delivery and logistics companies, e-commerce retailers, ride sharing companies and more can leverage the REEcorner architecture to build EVs based on their exact needs and specifications, while no longer being constrained to purely “off-the-shelf” offerings.
REE will utilize a CapEx-light manufacturing model comprised of globally located integration centers, which creates scalable and agile unit economics. REE will utilize manufacturing capacity via a secured and exclusive global network of Tier 1 partners in over 30 countries, with point-of-sale assembly. This strategy is expected to enable REE to reach profitability by 2024.
SUBSEQUENT EVENT – 8/26/22 – LINK
- The Company is offering to all holders of the warrants the opportunity to receive 0.20 Class A ordinary shares in exchange for each outstanding warrant tendered by the holder and exchanged pursuant to the Offer.
- The Company is offering up to an aggregate of 3,112,500 of its Class A ordinary shares in exchange for the warrants.
- The Company is also soliciting consent from holders of the public warrants and the private placement warrants to amend the warrant agreement that governs all of the warrants to permit the Company to require that each warrant that is outstanding upon the closing of the Offer be converted into 0.18 Class A ordinary shares, which is a ratio 10% less than the exchange ratio applicable to the Offer
- The company requires 50% of the outstanding voters to will vote for the tender, and already have support from 20%.
- As of August 22, 2022, a total of 15,562,500 warrants were outstanding.
TRANSACTION
- The transaction values the combined company at a pro forma enterprise value of $3.1 billion.
- Pursuant to the merger and following the share exchanges, the combined company is expected to receive approximately $500 million in gross cash proceeds from a combination of US $201 million in cash held in 10X SPAC’s trust account, assuming no public shareholders exercise their redemption rights at closing, and $300 million from a fully committed PIPE with participation from long-term strategic investors including Koch Strategic Platforms, Mahindra & Mahindra and Magna International.
- All existing shareholders and investors will continue to hold their equity ownership, including Mitsubishi Corporation, American Axle, and Musashi Seimitsu Industry.
- Net cash from the transaction will be used to fund growth of the combined company.
- Current REE shareholders will remain the majority owners of the combined company at closing.
PIPE
- $300 million at $10.00 per share from a fully committed PIPE with participation from long-term strategic investors including:
- Koch Strategic Platforms, Mahindra & Mahindra and Magna International.
LETTER AGREEMENT
- the Sponsor, as the holder of all outstanding shares of Class B Common Stock, has agreed to waive its right to receive any Anti-Dilution Shares in excess of the number of shares of Company Common Stock issuable pursuant to the Class B Share Ratio.
- In addition, the Sponsor has agreed in the Letter Agreement to forfeit and surrender, after the closing of the Business Combination,
- (i) a number of Class A Ordinary Shares of REE equal to
- (i) 1,500,000 if the volume weighted average trading price of the Class A Common Stock of the Company on the date of the closing of the Business Combination (the “First Day Trading Price”) is less than $13.00,
- (ii) 1,000,000 if the First Trading Day Price equals or exceeds $13.00 but is less than $16.00,
- (iii) 500,000 if the First Trading Day Price equals or exceeds $16.00 but is less than $20.00, and (iv) 0 if the First Trading Day Price equals or exceeds $20.00
- (i) a number of Class A Ordinary Shares of REE equal to
LOCKUP
- The Sponsor has agreed that it shall not transfer any of its REE Class A Ordinary Shares issued in connection with the Business Combination until:
- (i) with respect to 25% of such shares, the date that is 90 days following the Closing Date, and (ii) with respect to 75% of such shares, the first to occur of
- (x) the date that is 12 months following the Closing Date and
- (y) such time as the closing price of the REE Class A Ordinary Shares equals or exceeds $13.00 per share for any 20 trading days out of 30 consecutive trading days following the Closing Date; provided that if the condition set forth in this subclause (y) is met prior to the date that is 180 days following the Closing Date, the restriction on such shares shall expire on the date that is 180 days following the Closing Date (the “Sponsor Lock-Up Period”).
- Further, each Insider has agreed that it shall not transfer any of its REE Class A Ordinary Shares issued in connection with the Business Combination until the date that is 180 days following the Closing Date.
- The foregoing restrictions on transfer of the Sponsor’s and the Insiders’ REE Class A Ordinary Shares shall terminate and no longer be applicable upon the date following the Closing Date on which the REE completes a liquidation, merger, capital stock exchange, or other similar transaction that results in all of REE’s shareholders having the right to exchange their REE Class A Ordinary Shares for cash, securities or other property.
- The Sponsor also has agreed not to transfer any of its REE Warrants until 30 days after the Closing Date.
- (i) with respect to 25% of such shares, the date that is 90 days following the Closing Date, and (ii) with respect to 75% of such shares, the first to occur of
NOTABLE CONDITIONS TO CLOSING
- The Company shall have at least $225,000,000 in cash and cash equivalents at the time of the Closing after giving effect to the redemption of public shares by the Company’s public stockholders.
NOTABLE CONDITIONS TO TERMINATION
- By either the Company or REE if the closing of the transactions contemplated in the Merger Agreement has not occurred by August 15, 2021 (the “Outside Date”)
ADVISORS
- Morgan Stanley & Co. LLC is serving as lead placement agent on the PIPE offering.
- Cowen is serving as financial advisor to REE and as a placement agent on the PIPE offering.
- White and Case LLP, Zemah Schneider & Partners, and Goldfarb Seligman & Co. are serving as legal advisor to REE
- Wells Fargo Securities is serving as financial advisor to 10X SPAC.
- JVB Financial is serving as capital markets advisor to 10X SPAC.
- Morgan, Lewis & Bockius LLP and Gornitzky & Co. are serving as legal advisor to 10X SPAC.
- Latham & Watkins LLP is serving as legal advisor to the placement agents.
MANAGEMENT & BOARD
Executive Officers
Hans Thomas, 43
Chairman and Chief Executive Officer
Mr. Thomas founded 10X Capital in January 2004, and since its founding, he has served as chief executive officer of 10X Capital. Since July 2019, he has served chairman of 10X Capital subsidiary Growth Technology Partners and chairman of 10X Capital Partners, a FINRA-registered investment adviser. Mr. Thomas also served as executive director of One Zero Capital, a New York City-based financial technology (“FinTech”) investor, from August 2001 until December 2019. As an entrepreneur, Mr. Thomas was on the founding teams of venture-backed FinTech startup InternetCash (1999), online mortgage firm RefinanceOne (2004) and data science firm TheNumber (2015). Mr. Thomas is regarded as a top technology sector investor, financier and visionary because of his track record of identifying and investing in promising early stage opportunities and connecting them with institutional capital to help accelerate their growth. Notable portfolio companies and personal investments include Robinhood, AlphaFlow, Inc., Milo Credit, Better and Climb, whose equity investors include Sequoia, Kleiner Perkins, Point72 Ventures, Social Capital, and QED Investors, and whom have obtained significant financing from leading institutional investors and investment banks, such as The Blackstone Group, Inc. (NYSE: BX), The Goldman Sachs Group, Inc. (NYSE: GS) and Jefferies Group LLC. Mr. Thomas was also involved with 10X Capital’s role as an early investor in DraftKings Inc. (Nasdaq: DKNG), which completed a business combination with Diamond Eagle Acquisition Corp., a SPAC, in April 2020. Mr. Thomas was also actively involved in the business combination process of Shift Technologies, Inc. (“Shift”), which announced a business combination transaction with Insurance Acquisition Corp. (Nasdaq: INSU), a SPAC, in June 2020. Mr. Thomas attended New York University.
David Weisburd, 34
Chief Operating Officer and Director
Mr. Weisburd founded the venture capital firm Growth Technology Partners in May, 2015 and served as general partner until December 2019, when the firm was acquired by 10X Capital. The portfolio companies of Growth Technology Partners include 23andMe, CaaStle, Circle, Palantir, Pipefy, Punchh, Ripple, Tonal, Vicarious and Wish. Mr. Weisburd now serves as General Partner and co-head of venture capital at 10X Capital, where he has led the firm’s investments into Robinhood, Compass Therapeutics, HeadSpace and DraftKings Inc. (Nasdaq: DKNG). Mr. Weisburd also serves as a partner of Flight VC, an investment syndicate with over 2700 members across Silicon Valley and other tech hubs including Boston, Los Angeles, and New York, and whose members range from angel investors to entrepreneurs and venture capitalists. Flight VC has a prolific track record investing in companies including Betterment, Carta, Cruise Automotive, Discord, Dollar Shave Club, Fastly, Inc. (NYSE: FSLY), LinkedIn, Paypal, Inc. (Nasdaq: PYPL), Rent the Runway, and many others. In addition to his direct investment activity, Mr. Weisburd has also conducted a substantial amount of secondary market investment into companies such as Lyft, Inc. (Nasdaq: LYFT), One Medical Group (Nasdaq: ONEM), Space X, and Spotify (NYSE: SPOT). Prior to his venture capital career, Mr. Weisburd was on the founding teams of two venture-backed technology startups, isocket (acquired by Magnite (Nasdaq: MGNI)) and RoomHunt (acquired by RentLingo). Mr. Weisburd received a BS in management and entrepreneurship from Indiana University — Kelley School of Business, an MBA from Dartmouth – Tuck School of Business, and is currently pursuing a masters in psychology from Harvard University.
Guhan Kandasamy, 39
Chief Financial Officer
Since April, 2018, Mr. Kandasamy has served as the chief credit and data officer and a member of the board of directors of 10X Capital Partners, LLC, where he also served as a member of the investment committee and oversaw the firm’s credit policy. In 2015, Mr. Kandasamy co-founded TheNumber, a One Zero Capital company, which provides credit market analytics and intelligence to leading credit hedge funds, Bulge Bracket Banks and Retail Banks. At TheNumber, he first served as the founding product manager, and as chief executive officer from January 2016 to March 2018. From October, 2010 to January 2015, Mr. Kandasamy served as global head of product and data analytics at Opera Solutions, LLC (now ElectrifAi), where he co-founded the company’s financial services vertical while helping the founders raise its first private capital from Silver Lake Partners, KKR & Co. Inc. and Wipro Limited (NYSE: WIT). Mr. Kandasamy has also previously served as Vice President of US Structured Finance for the global credit ratings agency DBRS, Inc. and as analyst for the private secondary market firm SecondMarket, Inc., which was later acquired by Nasdaq. Prior to that, as its first product employee, he served as the founding product manager at CoreLogic, Inc. (NYSE: CLGX) from January 2004 to June 2007, and there he led development of CoreLogic’s product suite including Loansafe, the credit risk product used by a large portion of the mortgage market, as well as CoreLogic’s initial Automated Value Models (“AVMs”) and AVM cascade models for real estate assets, which remain the industry standard. During his tenure, he provided key evaluation and assistance to CoreLogic through several major corporate acquisitions, including First American Corporation. The company now produces over $1.7B in annual revenue and has an enterprise value of $5.3B. Mr. Kandasamy began his career in 2003 at the Federal National Mortgage Association (“Fannie Mae”) as a credit risk policy analyst, where he developed the agency’s still-operational and patented Consumer Credit Risk Assessment Model (FMCA), along with several capital allocation, collateral risk and property valuation models. Mr. Kandasamy received an MBA with a concentration in Finance from Oxford University in 2010 and a received a double BA from Johns Hopkins University in 2003.
Oliver Wriedt, 48
President and Head of Capital Markets
Mr. Wriedt has twenty-seven years of experience in lending, structuring, portfolio management and business development. He has been an investor in early stage FinTech companies since 2014. Mr. Wriedt most recently served as chief executive officer of DFG Investment Advisers (“DFG”) from April 2019 to July 2020. DFG is a structured credit asset manager focused on collateralized loan obligations (“CLOs”) and leveraged loans, with $8 billion of assets under management (“AUM”). Prior to DFG, Mr. Wriedt spent six years at CIFC Asset Management from March 2012 to May 2018, where he most recently served as co-chief executive officer. During his tenure at CIFC, Mr. Wriedt took the company private in a $333 million strategic sale. CIFC’s AUM have grown to $26 billion. Mr. Wriedt was responsible for business development at the credit arm of Providence Equity Partners from 2010 to 2012. Later renamed Benefit Street, the asset manager grew to $26 billion and was acquired by Franklin Templeton (NYSE: BEN). Mr. Wriedt was previously a partner at Sciens Capital Management from 2008-2009 and was a partner at Golden Tree Asset Management from 2004 to 2008. Mr. Wriedt was originally trained as a banker at Deutsche Bank (NYSE: DB) and NORD/LB in Hannover, Singapore, London and New York. Since February 2020, Mr. Wriedt has served on the board of directors of Cadence Group, Inc., a New York-based digital securitization and investment platform for private credit. He is a seed investor in FinTech lenders Milo Credit and Pollen VC and payment platforms EMQ and QRails. In addition, he serves on the Board of Directors of The River Fund, a non-profit organization dedicated to eradicating hunger, homelessness and poverty in New York City. Mr. Wriedt graduated from Duke University in 1993 with an AB in History and Economics.
Board of Directors
Chris Jurasek, 54
Director
Mr. Jurasek has been an operating executive for Clearlake Capital Group, L.P. (“Clearlake”) since 2014. Clearlake is a Los Angeles-based private equity investor with $24 billion of AUM. Clearlake’s core target sectors include software and technology-enabled services, industrials and consumer. Since June 2020, Mr. Jurasek has also served as the chief executive officer of EagleView, a leading technology provider of aerial imagery, data analytics and GIS solutions with more than 200 patents, backed by Clearlake and Vista Equity Partners. Prior to EagleView, Mr. Jurasek served as president of JetSmarter, a private aviation software company acquired by Vista Global, from August 2018 to December 2019. Between February 2013 and January 2020, Mr. Jurasek also held the roles of president, chief executive officer and vice chairman of Calero Software, LLC, which merged with technology expense management software firm MDSL in a 2019 deal backed by Oak Hill Capital and Riverside Partners. From August 2017 to January 2019, he served as a member of the board of directors of ConvergeOne Holdings, Inc., a leading IT services provider of collaboration and technology solutions for large and medium enterprises, which went public through a business combination with a SPAC, Forum Merger Corp., in February 2018 at an enterprise value of $1.2 billion, and was subsequently acquired by CVC for $1.8 billion ($12.50 per common share). Chris earned his MBA from the Kellogg School of Management at Northwestern University and holds a bachelor’s degree from Bowling Green State University.
Sigurgeir Orn (“Ziggy”) Jonsson, 46
Director
Mr. Jonsson has served as the senior partner and chief technology officer of One Zero Capital, a New York City-based venture capital firm that builds and invests in companies at the nexus of credit and technology, since June 2013. In addition, Mr. Jonsson is an accomplished software engineer, serving as the founding technologist or technology advisor to multiple 1/0 portfolio companies, including Better, Future Finance, Climb, Paribus (acquired by CapitalOne (NYSE: COF)) and Notable. Mr. Jonsson also built the underlying data analytics technology behind PhoenixABS. Mr. Jonsson has also been as the co-founder and chief technology officer of TheNumber since September 2015 and a partner of Ferry Farm Capital Management since September 2015. From September 2015 to June 2019, Mr. Jonsson served on the board of Framtíðin, a student lender based in Iceland. Mr. Jonsson held multiple senior positions at Bank of America (NYSE: BAC), including head of structured credit training, North America from 2006 to 2008 and head of index derivatives, EMEA from 2004 to 2006. Mr. Jonsson received BS in Economics from the University of Iceland.
Woodrow H. Levin, 42
Director
Mr. Levin has served on the board of directors of DraftKings Inc. (Nasdaq: DKNG) since December 2013 and has helped the company navigate numerous regulatory and strategic challenges throughout his tenure, culminating in the recent merger with a SPAC, Diamond Eagle Acquisition Corp., in April 2020. Since February 2019, Woody has been the founder and chief executive officer of Extend, Inc., a venture-backed technology company offering an application programming interface-first solution for merchants to offer extended warranties and protection plans. From February 2018 to February 2019, Mr. Levin was the founder and chief executive officer of 3.0 Capital, a multi-strategy crypto asset hedge fund. From August 2015 to February 2018, Mr. Levin was vice president of growth at DocuSign, Inc. (Nasdaq: DOCU) (“DocuSign”), which allows organizations to digitally prepare, sign and manage agreements. Mr. Levin founded Estate Assist, Inc. in February 2014, and has served as its chief executive officer until September 2015, when it was acquired by DocuSign. Mr. Levin received a BA in business from the University of Wisconsin and a JD from the Chicago-Kent School of Law, Illinois Institute of Technology.