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TradeUP Global Corporation

TradeUP Global Corporation

Mar 4, 2021 by Kristi Marvin

PROPOSED BUSINESS COMBINATION: SAITECH Limited

ENTERPRISE VALUE: TBD
ANTICIPATED SYMBOL: SAI

TradeUP Global Corporation proposes to combine with SAITECH Limited, a Eurasia-based energy-saving bitcoin mining operator that engages in the hosting of bitcoin mining machines for its clients.

  • SAITECH uses a proprietary liquid cooling and heat exchange technology towards mining machines that enables utilization of waste heat to provide recycled energy heating for potential customers while achieving lower mining operating costs.
  • The Company strives to become the most cost-efficient digital assets mining operation company globally while simultaneously promoting the clean transition of the bitcoin mining industry.
  • Accordingly, SAITECH believes it is categorized as energy-saving amongst other bitcoin hosting operators based on its focus on recovering and applying waste energy in its operations.
  • SAITECH also plans to commence bitcoin mining by the end of 2021.

Investment Highlights

  • SAITECH currently operates a 15MW power capacity mining operation, with another 90MW under construction that it expects will come on-line in the fourth quarter of 2021. A planned expansion of an additional 200-300MW is expected to be deployed in 2022.
  • Following its successful pilot programs of utilizing waste heat from bitcoin mining for large scale heating in China (suspended in June 2021 for compliance of regulation), SAITECH is currently conducting a new waste heat exchange pilot study in Finland and expects to roll out heating data centers in Finland in the future once the study concludes. SAITECH does not currently own the sites or material equipment on which its services are performed.
  • For the first half-year ended June 30, 2021, SAITECH had revenues of approximately $8.0 million.

SUBSEQUENT EVENT 3/23/22 – 8-K

  • On March 23, 2022 TradeUp extended the Outside Date thereunder to May 31st, 2022.

TRANSACTION

  • The transaction values SAITECH at a $228 million equity valuation.
  • Estimated cash proceeds to the Company from the transaction are expected to consist of TradeUP Global’s $44.9 million of cash in trust (assuming no redemptions).
  • The Company expects to use the proceeds from the transaction to invest in SAITECH’s growth initiatives and recycled energy technologies, including expanding the current mining data center operation capacity in Eurasia, deploying more heating data center sites in Northern Europe, exploring new mining operation sites globally, and to provide additional working capital in addition to covering transaction-related costs.
  • Upon the closing of the transaction, and assuming none of TradeUP Global’s public shareholders elect to redeem their shares, existing SAITECH shareholders, including ESAH, are expected to own approximately 80% of the outstanding ordinary shares of the combined company, the TradeUP Global sponsor is expected to own approximately 4% of the outstanding ordinary shares of the combined company (and, together with certain affiliates that are existing shareholders of SAITECH), beneficially own approximately 14%), and TradeUP Global public shareholders are expected to own approximately 16% of the outstanding ordinary shares of the combined company.
  • ESAH will receive new Class B ordinary shares of TradeUP Global in exchange for existing Class B ordinary shares of SAITECH that will entitle ESAH to approximately 87% of the voting power of the TradeUP Global Class A ordinary shares and Class B ordinary shares voting together as a single class.
  • Such new series of TradeUP Class B ordinary shares will otherwise have the same economic terms as Class A ordinary shares.

TradeUp Transaction Overview

PIPE

  • There is no PIPE for this transaction.

LOCK-UP

  • The Company, the Sponsor, and certain insiders of the Company have agreed to be bound by certain amended lock-up arrangements in which:
    • The Shareholder agrees not to sell or transfer any Purchaser Class A Shares or any prior Class B ordinary shares of the Company that are convertible into Purchaser Class A Shares until:
      • (a) For one-half of the Lock-up Shares, the earlier of
        • (x) The date on which the VWAP of the Purchaser Class A Shares exceeds $14.00 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for any 20 trading days within any 30-trading day period commencing on the date that is 180 days after the Closing Date.
        • (y) Date of the first anniversary of the Closing Date.
      • (b) For one-half of the Lock-up Shares, the earlier of
        • (x) The date on which the VWAP of the Purchaser Class A Shares exceeds $17.50 per share (as adjusted for stock splits, stock dividends, reorganizations, and recapitalizations) for any 20 trading days within any 30-trading day period commencing on the date that is 180 days after the Closing.
        • (y) Date of the first anniversary of the Closing Date.

NOTABLE CONDITIONS TO CLOSING

  • The aggregate cash available to Purchaser at the Closing from the Trust Account after giving effect to the redemptions of any shares of Purchaser Class A Shares for holders that timely exercise and do not waive their redemptions rights in respect of the Transaction, but before giving effect to the consummation of the Closing and the payment of any outstanding Purchaser Transaction Expenses, Company Transaction Expenses, and Indebtedness, shall equal or exceed $17,500,000.

NOTABLE CONDITIONS TO TERMINATION

  • By written notice by Purchaser or the Company if any of the conditions to the Closing have not been satisfied or waived by March 31, 2022 (the “Outside Date”).
  • On March 23, 2022 TradeUp extended the Outside Date thereunder to May 31st, 2022.

ADVISORS

  • Winston & Strawn LLP acted as the legal advisor to SAITECH.
  • Very Wise Consulting acted as financial advisor to SAITECH.
  • Duff & Phelps acted as the M&A financial advisor to the Audit Committee of TradeUP Global.
  • Sidley Austin LLP acted as the legal advisor to TradeUP Global.
  • DLA Piper LLP acted as legal advisor to the Audit Committee of TradeUP Global.

MANAGEMENT & BOARD

Executive Officers

Jianwei Li, 43
Chairman and Co-Chief Executive Officer

Mr. Li has served as the founding and managing partner of Zhencheng Capital, a venture capital firm specializing in early-stage technology investments since May 2016. Mr. Li is also the Chairman and Co-Chief Executive Officer of TradeUP Acquisition Corp., a special purpose acquisition company formed in January 2021 and currently seeking Nasdaq listing. From May 2015 to May 2016, Mr. Li served as Chief Investment Officer and Partner at ZhenFund, an early-stage investment firm. From July 2011 to May 2015, Mr. Li served as Vice President at Sequoia Capital China and led the investments in AI hardware and corporate service sectors. From February 2007 to June 2011, Mr. Li served as the Vice President at Fidelity Growth Partners Asia and oversaw investments in the TMT sector. From July 2004 to January 2007, Mr. Li was a consultant at Boston Consulting Group. Mr. Li graduated from Beijing University and holds his Bachelor Degree and MBA Degree from Beijing University of Posts and Telecommunications. Mr. Li has a demonstrated track record of successful venture capital investments in disruptive technologies including Cloud / SaaS / AI / Robotics / Drone / Network security. Mr. Li was ranked #88 on 2020 Forbes China top 100 venture investors.

Lei Huang, 50
Co-Chief Executive Officer, Director

Mr. Huang currently serves as the Chief Executive Officer of US Tiger Securities, Inc. and a member of the board of directors of its parent company, UP Fintech Holding Limited (Nasdaq: TIGR). Mr. Huang also serves as a member of the Board of Directors of MDLand International Corporation. Prior to joining US Tiger Securities, Mr. Huang was the Chief Executive Officer of Haitong Securities USA LLC, and also served as Chief Compliance Officer and Operation Manager of CICC US Securities, Inc from 2010 through 2018. Prior to that, Mr. Huang served as a Compliance Officer at Morgan Stanley, Lehman Brothers, and Barclays. Mr. Huang also formerly served as a Regulatory Supervisor at the National Association of Securities Dealers. Mr. Huang holds a Master’s degree in Global Financial Analysis from Bentley University.

Luqi “Lulu” Wen, 40
Chief Financial Officer

Ms. Wen is also the Chief Financial Officer of TradeUP Acquisition Corp., a special purpose acquisition company formed in January 2021 and currently seeking Nasdaq listing. Ms. Wen has been the financial director of Zhencheng Capital since May 2016. Form August 2011 to May 2016, Ms. Wen served as the senior finance manager in Harvest Fund, one of the largest Chinese institutional asset managers by assets under management (AUM). She also worked as a financial reporting manager at DHL-Sinotrans from 2007 through 2010 and senior financial analyst at Lenovo Greater China from 2005 to 2007. Ms. Wen received her Bachelor’s Degree from Sichuan University in Business Administration and Master’s Degree from University of Leeds in International Finance. In addition, she holds CFA and ACCA designations.

Board of Directors

Michael Davidov, 46
Independent Director

Mr. Davidov has more than 20 years of experience in the fields of investments and corporate finance. In 2012, he co-founded and served as the CIO at Middle Kingdom Value Fund and Global Value Partners – special situations funds focused on China-related and global value investments.  From 2006 to 2009, Mr. Davidov was a part of the management team of Middle Kingdom Alliance Corp – a U.S.-listed Special Purpose Acquisition Company (SPAC) that successfully completed its merger with Pypo China Holdings, a Beijing-based cell phone distribution company, that resulted in a NASDAQ-listed company – Funtalk China Holdings Limited (Formerly: NASDAQ: FTLK).  From 1999 until 2009 Mr. Davidov was a director of corporate finance and Portfolio Manager at High Capital Funding, LLC/Generation Capital, a hybrid private equity/special situations fund, where he structured and made private investment in public entity (PIPE) investments as a principal.  Mr. Davidov received his BS in mathematics from Southern Illinois University and MBA in Finance from J. Mack Robinson School of Business at Georgia State University.

Tao Jiang, 51
Independent Director

Mr. Jiang serves as the Founder & Chairman of China Developer Community (CSDN), and the founding partner of GeekFounders from June 2014. Mr. Jiang also serves as an independent director of TradeUP Acquisition Corp., a special purpose acquisition company formed in January 2021 and currently seeking Nasdaq listing. Mr. Jiang has over 25 years of experience in software and internet industry as a programmer, entrepreneur and angel investor. He led the development of Giant handwriting computer, PowerWord and Herosoft Player. In January 1999, Mr. Jiang founded CSDN, a professional Chinese IT technology community which currently has more than 31 million registered users, covering 90% of Chinese developers, and ranked 28th in Alexa global website traffic rank. In June 2011, Mr. Jiang founded GeekFounders, and led investments in a variety of high-tech startups including Juhe, SequoiaDB, itcast, LOCOJOY (creator of “I’m MT”) and ITJuZi.com. Mr. Tao received his bachelor degree from Sichuan University in computational mathematics and application software.

David X. Li, 58
Independent Director

Mr. Li is a professor of finance, and faculty co-director of Master of Finance (MF) program at Shanghai Advanced Institute of Finance (SAIF), and an associate director of Chinese Academy of Financial Research (CAFR) at Shanghai Jiaotong University where he leads CAFR’s Risk Management Center and FinTech Research Center. Previously, Mr. Li worked at leading financial institutions for more than two decades in the areas of new product development, risk management, asset/liability management and investment analytics, including as the Chief Risk Officer for China International Capital Corporation (CICC) Ltd, head of credit derivative research and analytics at Citigroup and Barclays Capital, and head of modeling at AIG Investments. Mr. Li has a PhD degree in statistics from the University of Waterloo, Master’s degrees in economics, finance and actuarial science, and a bachelor’s degree in mathematics. Dr. Li was one of the pioneers in credit derivatives. His seminal work of using copula functions for credit portfolio modeling has been widely cited by academic research, broadly used by practitioners for credit portfolio trading, risk management and rating, and well covered by media such as Wall Street Journal, Financial Times, Nikkei, CBC News.

ByKristi Marvin