Fintech start-up Acorns goes public in $ 2 billion SPAC contract –

Fintech start-up Acorns goes public in $ 2 billion SPAC contract – fr

Acorns Grow Inc. plans to go public in merger with blank check company in deal that values ​​digital savings and investment app at around $ 2.2 billion of dollars.

The Irvine, Calif.-Based fintech company said Thursday it would combine with Pioneer Merger Corp.

, a special purpose acquisition company affiliated with Falcon Edge Capital and Patriot Global Management hedge funds. The plans were first reported by The Wall Street Journal.

Acorns automatically invests small user contributions in baskets of stocks and bonds. It has over 4 million subscribers, most of whom pay $ 1 per month for the service, although Acorns also offers options at $ 3 and $ 5 per month for additional features such as bank accounts or plans. of retirement. As of May, Acorns had $ 4.74 billion in assets under management, according to a recent regulatory filing.
As part of the transaction, Pioneer would contribute approximately $ 400 million in cash, with an additional $ 165 million from a related private placement involving funds managed by BlackRock. Inc.,

BLK 0,59%

Wellington Management Co. and other investors.

Special Purpose Acquisition Companies, or SPACs, like Pioneer, are corporate shells that raise funds from investors and go in search of a private company interested in taking both the cash out of the shell. and its stock exchange listing as an alternative to an initial public offering. PSPCs raised more than $ 100 billion in 2021, according to data provider SPAC Research. But the stock prices of many PSPCs and the companies they have floated on the stock exchange have fallen in recent weeks.

PSPCs have become a popular outlet for fintech startups, along with banking startup Social Finance Inc., real estate platform Better Holdco Inc., and trading app eToro Group Ltd. have all agreed to multi-billion dollar deals with PSPCs in recent months.

Private companies are flocking to Special Purpose Acquisition Companies, or SPACs, to bypass the traditional IPO process and get a public listing. WSJ explains why some critics say investing in these so-called blank check companies is not worth the risk. Illustration: Zoë Soriano / WSJ

PSPC fashion has also caught the attention of regulators. The Securities and Exchange Commission is considering whether to introduce new rules or guidance on PSPCs in an attempt to protect individual investors, Chairman Gary Gensler told lawmakers this week.

Individual investors are expected to play an important role in Acorns’ merger with Pioneer. Acorns chief executive Noah Kerner said in an interview that he plans to contribute up to 10% of his personal stake in the company to fund a program that gives shares to certain Acorns customers. The Pioneer sponsor plans to do the same.

Existing investors in Acorns include companies such as PayPal Holdings Inc.

and NBCUniversal from Comcast Corp. as well as celebrities like Jennifer Lopez and Dwayne “The Rock” Johnson.

Acorns predicted that it would generate $ 126 million in revenue this year and $ 309 million in 2023, up from $ 71 million in 2020. The company also predicted that its user base would exceed 8 million subscribers by 2023. .

Even achieving that goal would make Acorns much smaller than investment startup Robinhood Markets Inc., which had around 20 million users at the end of 2020, the Journal previously reported.

Unlike Robinhood, Acorns currently does not allow users to buy or sell individual stocks. Mr Kerner said Acorns has guided users to build long-term diversified holdings instead of frequent transactions, but the company is also considering introducing an option that allows users to customize up to 10% of their portfolios with individual stocks of their choice.

“Acorns will be on the good side of history,” Kerner said. “We are not a company that grows at all costs.”

Write to Peter Rudegeair at [email protected]

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