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Ivanhoe Capital Acquisition Corp.

Ivanhoe Capital Acquisition Corp.

Dec 18, 2020 by Matt Cianci

PROPOSED BUSINESS COMBINATION: SES Holdings Pte. Ltd.

ENTERPRISE VALUE: $2.709 billion
ANTICIPATED SYMBOL: SES

Ivanhoe Capital Acquisition Corp. announced it has entered into a definitive agreement for a business combination with SES Holdings Pte. Ltd. (“SES”), the world leader in the development and manufacturing of high-performance hybrid Lithium-Metal (Li-Metal) rechargeable batteries for electric vehicles (“EVs”).

Founded in 2012 as a spin-out company of the Massachusetts Institute of Technology, SES operates two battery-prototyping facilities in the U.S. and China. The company’s hybrid Li-Metal battery is expected to enable the next generation of high-range and affordable EVs. The hybrid Li-Metal approach provides the superior energy density of Li-Metal via the proven manufacturing efficiencies of lithium-ion batteries.

SES’s hybrid Li-Metal batteries use a high-energy-density Li-Metal anode, a protective anode coating, a proprietary high-concentration solvent-in-salt liquid electrolyte, and artificial intelligence (“AI”) safety features that allow for greater performance and manufacturing efficiencies than today’s all-solid-state Li-Metal batteries. SES entered into its joint development agreement with Hyundai and Kia in May 2021 to develop “A-Sample” Li-Metal batteries for Hyundai’s EVs. This followed the March 2021 announcing of a joint development agreement with General Motors, a supporter of SES since 2015, to deliver a high-performance “A-Sample” Li-Metal EV battery at a new pre-production manufacturing facility in the Boston, Massachusetts area.

SUBSEQUENT EVENT – 8-K 10/22/21

  • The New Subscription Agreement is with a strategic investor and is in substantially the same form as the Initial Subscription Agreements. Pursuant to the New Subscription Agreement, the Company agreed to issue and sell, in the PIPE Financing, an aggregate of an additional 7.5 million shares of New SES Class A common stock, at a purchase price of $10.00 per share, for an aggregate purchase price of $75 million, bringing the aggregate amount of commitments from under the Initial Subscription Agreements and the New Subscription Agreement (together, the “Subscription Agreements”) to $275 million.
    • The additional commitments help ensure that the Company will satisfy the closing condition in the Business Combination Agreement that the Company have at least $200 million of available cash from its trust account and proceeds from the PIPE Financing at the closing of the Business Combination (the “Closing”).

TRANSACTION

  • The business combination values the combined company at an implied $3.6 billion pro forma equity value, inclusive of a $300 million earn-out, at a $10.00 per share price and assuming no redemptions by Ivanhoe’s public shareholders and excluding certain sponsor shares that are subject to stock price-based vesting.
  • The combined company is expected to receive up to $476 million of gross proceeds from a combination of a fully committed common stock PIPE (private investment in public equity) offering of $200 million at $10.00 per share, along with the approximately $276 million cash held in Ivanhoe’s trust account assuming no redemptions by Ivanhoe’s public shareholders.
  • The transaction values the combined company at a pro forma implied equity value of approximately $3.6 billion (inclusive of a $300 million earn-out) with total expected gross proceeds of $476 million (assuming no redemptions by Ivanhoe’s public shareholders).
  • Including expected transaction proceeds and existing cash on SES’s balance sheet, SES is expected to have over $600 million of cash at transaction close, which will help fund the company’s future growth and transition into its commercialization phase in 2025.

Ivanhoe Transaction Summary

PIPE

  • Fully committed common stock PIPE (private investment in public equity) offering of $200 million at $10.00 per share.
  • Investors in the PIPE transaction include Koch Strategic Platforms Hyundai Motor Company, Geely Holding Group, Kia Corporation, General Motors, LG Technology Ventures, Vertex Ventures, Foxconn, SAIC Motor, Fidelity Investments Canada ULC (certain funds), and Franklin Templeton.

LOCK-UP

In connection with the Closing, certain SES shareholders will enter into a registration rights agreement with New SES pursuant to which, among other things, they will agree not to transfer, sell or assign their shares of Class A common stock for six months following the Closing.

The Sponsor and the Insiders agreed not to transfer, sell or assign the Subject Shares until the earlier of:

  • with respect to 20% of such Subject Shares, until the date that is 180 days after the Closing.
  • with respect to 20% of such Subject Shares, until the closing price of the Class A common stock equals or exceeds $12.00 for any 20 trading days within a 30-trading day period following the date that is 150 days after the Closing (the “Requisite Trading Period”).
  • with respect to 20% of such Subject Shares, until the closing price of the Class A common stock equals or exceeds $14.00 for the Requisite Trading Period.
  • with respect to 20% of such Subject Shares, until the closing price of the Class A common stock equals or exceeds $16.00 for the Requisite Trading Period.
  • with respect to the remaining 20% of such Subject Shares, until the closing price of the Class A common stock equals or exceeds $18.00 for the Requisite Trading Period, and (ii) the date on which New SES completes a liquidation, merger, capital stock exchange or other similar transaction after the Closing that results in all of the stockholders having the right to exchange their common stock for cash, securities or other property;
    • provided that in the event that the per-share value of the cash, securities or other property to be received by the holders of Class A common stock in such liquidation, merger, capital stock exchange or other similar transaction (the “Per Share Transaction Value”) is less than $18.00, then the Subject Shares will be released from these transfer restrictions to the Sponsor and the Insiders on a pro rata basis as follows:
      • (x) to the extent not previously released, all Subject Shares that are subject to release upon achievement of any share price performance requirements that are less than the Per Share Transaction Value will be released.
      • (y) the number of Subject Shares that would be released upon the achievement of the next share price performance requirement that is higher than the Per Share Transaction Value (the “Release Threshold”), multiplied by a fraction, the numerator of which equals
        • (x) 2, minus
        • (y) the amount by which the Release Threshold exceeds the Per Share Transaction Value, and the denominator of which equals 2, will be released. Any Subject Shares not released pursuant to the preceding sentence will be forfeited and cancelled.

EARNOUT

  • SES shareholders and optionholders will be entitled to receive 30,000,000 shares of Class A common stock (valued at $10.00 per share) (the “Earn-Out Shares”).
    • If the closing price of shares of Class A common stock of New SES is equal to or greater than $18.00 during the period beginning on the date that is one year following the closing of the Business Combination (the “Closing”) and ending on the date that is five years following the Closing.
  • SES optionholders will receive their Earn-Out Shares in the form of restricted shares of New SES at Closing, which will be subject to vesting based on the same terms as the Earn-Out Shares and will also be subject to forfeiture if such optionholder’s service with New SES terminates prior to the vesting.

NOTABLE CONDITIONS TO CLOSING

  • The aggregate cash proceeds from Ivanhoe’s trust account, together with the proceeds from the PIPE Financing, equaling no less than $200,000,000 (after deducting any amounts paid to Ivanhoe shareholders that exercise their redemption rights in connection with the Business Combination and after the payment of any transaction costs of Ivanhoe and SES).

NOTABLE CONDITIONS TO TERMINATION

  • By either Ivanhoe or SES if the Business Combination is not consummated by February 12, 2022

ADVISORS

  • Goldman Sachs & Co. LLC is serving as exclusive financial advisor to SES.
  • White & Case LLP is serving as legal advisor to SES.
  • Morgan Stanley & Co. LLC is serving as sole placement agent on the PIPE offering and as exclusive financial advisor to Ivanhoe.
  • Kirkland & Ellis LLP is serving as legal advisor to Ivanhoe.
  • ICR, LLC is serving as communications advisor for SES.

MANAGEMENT & BOARD

Executive Officers

Robert Friedland, 70
Chairman and Chief Executive Officer

Mr. Friedland has over 25 years of experience and has been recognized by leaders of the international financial sector and mineral resource industries as an entrepreneurial explorer, technology innovator and company builder. Mr. Friedland’s experience is extensive. Mr. Friedland is the Director, President and CEO of Ivanhoe Capital Corporation (“Ivanhoe Capital”) (since July 1988), the executive Co-Chairman (since September 2018) (previously the Executive Chairman from May 2012 until September 2018) of Ivanhoe Mines Ltd. and the Co-Chair Director of SK Global Entertainment, Inc. (since February 2017). Under Mr. Friedland’s tenure, Ivanhoe Capital has invested in a diverse portfolio of businesses. Additionally, Mr. Friedland has been the Chief Executive Officer of High Power Exploration Inc. (“HPX”) since December 2015. HPX is applying proprietary, geophysical technologies to rapidly evaluate underground geological targets and accelerate exploration programs targeting mineral and water resources. Mr. Friedland is also the Director, Chairman and President of Ivanhoe Pictures, Inc. (since May 2013), and a Director (since December 2016) and Chairman (since June 2018) of VRB Energy Inc. As one of the most recognized mining personalities and achievers in the world, Mr. Friedland is dedicated to serving on numerous boards in the natural resources sector. These positions include as a Co?Chairman and Director of Clean TeQ Holdings Limited (since September 2016), a Director of I-Pulse Inc. (since April 2008) and a Director of Kietta SAS (since November 2009), as well as the Chairman of Gold X Mining Corp. (since June 2020). Mr. Friedland graduated with a degree in political science from Reed College.

Gary Gartner, 64
Chief Financial Officer

As the Founding Member and Managing Director of Alchemy Capital Planning LLC since July 2013, Mr. Gartner provides sophisticated tax consulting, financial and business advisory services to a broad range of domestic and international clients. Mr. Gartner is also Senior Counsel at Dentons since February 2018 where he has experience counseling clients on the U.S. and international tax consequences of various transactions, restructurings and securities offerings, and advising generally on strategic joint ventures, mergers and acquisitions and a wide array of liquidity transactions. Prior, Mr. Gartner was a Partner, Chairman of the Firm, and Member of the Executive Committee at Kaye Scholer LLP, Chair of the U.S. Tax Practice at Torys LLP and an International Principal of Arthur Anderson LLP. Mr. Gartner is well regarded as a leading tax practitioner in both the United States and Canada and has written and lectured extensively on various topics, including the efficient structuring of business investments. Mr. Gartner’s experience also transcends to the Board of SK Global Entertainment Inc., where he is also Vice Chairman. Mr. Gartner holds a LL.M. in Taxation from the New York University and a L.L.B. from University of Ottawa Faculty of Law.

Andrew Boyd, 50
Chief Investment Officer and Director

From May 2014 to December 2019, Mr. Boyd was the Global Head of Equity Capital Markets at Fidelity Management & Research Company. Mr. Boyd has been the Managing Member of Bramalea Partners LLC since January 2020.

Board of Directors

Christopher Carter, 71
Director

 Mr. Carter’s career began in 1973 at Hambros Bank Limited. Since then, Mr. Carter has held a number of senior investment banking positions. For eighteen years, Mr. Carter worked at Credit Suisse First Boston Limited where he held the titles of Managing Director from 1988 to 2005, Head of Global Equity Capital Markets from 1993 to 2000 and served as Chairman of Europe from 2001 to 2005. In 2006, Mr. Carter joined Morgan Stanley & Co. (NYSE: MS) as Vice Chairman?Institutional Securities. He served as Head of Global Capital Markets from 2007 to 2008 and since 2012, Mr. Carter has been a Senior Advisor to Morgan Stanley. He has been the Chairman of Artorious Wealth Management since 2014 and a director of Mafic S.A. since 2016. Mr. Carter holds a B.A. from the University of Toronto.

Hirofumi Katase, 61
Director 

Mr. Katase has been the Executive Vice Chairman and a Director of I-Pulse since December 2017. Before joining I-Pulse and until July 2017, Mr. Katase served as Japan’s Vice Minister for International Affairs at the Ministry of Economy, Trade and Industry (“METI”). Having joined METI in April 1982, Mr. Katase had a successful and lengthy career, holding numerous senior positions such as the Director General of the Science and Technology Policy and Environment Policy Bureau from July 2013 to July 2015 and Trade Policy Bureau from July 2015 to June 2016. Mr. Katase previously was Deputy Secretary–General for Space Policy at the Cabinet Office from June 2010 to July 2012, where he led the development of national space policy, as well as the establishment of the Office of National Space Policy. Mr. Katase also held numerous Director and Deputy Director General positions at METI from September 2000 to June 2010. Katase earned a bachelor’s degree in law from the University of Tokyo and a master’s degree in applied economics from the University of Michigan.

Francis P. T. Leung, 66
Director 

Mr. Leung has nearly thirty years of experience in the investment banking industry, having advised many companies on corporate finance practices, including initial public offerings, mergers and acquisitions. Mr. Leung has been a director of Shanghai Industrial Holdings Limited since May 1996. Mr. Leung was also the Chairman of the Chamber of Hong Kong Listed Companies from May 2015 to June 2019. Mr. Leung was a managing partner of CVC Capital Partners, a leading international private equity group, during the period from March 2012 to September 2016, and was its non-executive Chair of China in the 5-year period prior to March 2012 and the 3-year period after September 2016. Prior to this, he was the Chairman of Citigroup Investment Banking, Asia (NYSE: C) from July 2001 to June 2006. Prior to joining Citigroup, he was successively the Chief Executive Officer and Vice Chairman of BNP Paribas Peregrine (OCTMKTS: BNPQF), which was formed in January 1998 with the merger of Peregrine Group’s (which he co-founded in 1988) Greater China equity and corporate finance team and BNP Paribas’ investment banking arm in Asia.

Edward T. Welburn Jr., 70
Director 

Mr. Welburn is a graduate of Howard University, and began his distinguished career as an intern for General Motors (NYSE: GM) (“GM”). For over forty years, Mr. Welburn worked at GM where he designed over 540 cars, worked in a variety of design studios, and in October 2003, became GM’s Vice President of GM Design North America, the first African American to hold that position in the industry and the highest ranking African American at GM. In March 2005, Mr. Welburn became the Vice President of GM Global Design, as he created a network of 11 GM Design Centers in 7 countries around the world. After leaving GM in 2016, Mr. Welburn formed The Welburn Group with a focus on automotive design, micro mobility design, and athletic shoe design. In April 2018, Mr. Welburn formed Welburn Media Productions becoming CEO and Executive Producer. Mr. Welburn has been inducted into the Automotive Hall of Fame, recipient of the Eyes On Design Lifetime Achievement Award, and the Black Engineer of The Year awards. Mr. Welburn is committed to serving the next generation of artist and designers by serving on the board of directors for the College for Creative Studies, Tony Bennett’s Exploring The Arts foundation, as well as America On Wheels.

 

ByMatt Cianci