Finnovate Acquisition Corp. (FNVT) to Combine with Scage International in $1Bn Deal

Finnovate (NASDAQ:FNVT) has entered into a definitive agreement to combine with sustainable heavy truck manufacturer Scage at post-money valuation of $1 billion.

Nanjing, China-based Scage is developing a line of hybrid heavy trucks for use in the mining and road freight sectors.

Transaction Overview

Finnovate has about $48.5 million in its current trust after seeing 73.2% of shares redeemed at a May extension vote. It now has until May 8, 2024 to complete a transaction under its new deadline.

The parties have not yet filed their merger documents or an investor presentation, but Finnovate’s profile page will be updated once more information is made available.

Quick Takes: SPAC deals have lately been looking to the skies through new eVTOL designers and innovators in private flight economics, but not long ago trucks were all the rage.

Hydrogen truck technology company Nikola (NASDAQ:NKLA) became one of the signature deals at the beginning of the current SPAC cycle (eventually in infamous fashion) and its March 2020 announcement was followed by Hyliion (NYSE:HYLN), Arrival (NASDAQ:ARVL), Lion Electric (NYSE:LEV), Lightning eMotors (NYSE:LEV) and Electric Last Mile before the end of the year.

All of these companies were developing various approaches to making heavy trucks and buses more sustainable by replacing internal combustion engines with hydrogen, electric or fuel cell motors in some form or fashion. This wave didn’t crest in 2020 either, these announcements were swiftly followed by a 2021 crop of deals including Proterra (NASDAQ:PTRA), Hyzon (NASDAQ:HYZN), Xos (NASDAQ:XOS) and truck-automation firms Embark (NASDAQ:EMBK) and Aurora (NASDAQ:AUR).

But, just as suddenly as the trucking tsunami hit land, it seemingly dissipated. Aurora’s deal – announced in July 2021 and closed that November – wound up being the last of its kind until now.

There was certainly some sense around this time that SPACs had perhaps over-picked this particular tree, but these were also nearly all North American companies. And, although 2022 brought some Asia-based EV deals, all of those targets are focused on consumer market segments.

As such, Finnovate may have found a fresher target than it would appear at first glance. A glance is so far about all the SPAC has given us, however.

Finnovate notes that Scage has completed the design, production and testing of at least some of its five zero-emissions truck designs. But, although it describes itself as being at the “batch delivery stage” it does not appear to be at the point of major production. Scage Founder and Chairman Chao Gao noted in the announcement press release that the company’s next step would be to build its production plants.

But beyond citing the deal’s ability to “make more people know about Scage”, the materials released thus far do not point to how these truck designs will make it to the road.

Scage’s models use hybrid engines, which have the potential to provide greater range than their pure EV peers, while extending its battery life with self-charging. For instance, in addition to charging the battery while the gas motor is running Scage’s Dragon King dump truck model would capture kinetic energy from its breaks as the 95-ton vehicle is descending down slopes.

The company has also worked up three semi-truck models – the Galaxy II, Galaxy III and Andromeda – as well as a concept for a driverless 120-ton dump truck for mining applications called the Sky Turtle. It claims it has designed Sky Turtle models to operate autonomously in formations. But, past forays into driverless trucking give reason to be skeptical of this technology’s readiness.

For one, all of the photos of the vehicles on Scage’s website appear to be illustrations photoshopping pictures of them into different environments. The company has not yet given evidence of the designs in use.

But, the deal nonetheless marks an interesting return to a sector that once headlined the SPAC market. It is also not a repeat play for the team.

In May, Sunorange Limited bought out the sponsor economics from Finnovate’s original sponsor, replacing its team with Chairman and CEO Calvin Kung and CFO Tomy Chiu Wang Wong. The SPAC has not filed updated bios for these new officers, but they do not appear to have had a role in SPACs in the past.

ADVISORS

• Scage Advisors:
  • Wilson Sonsini Goodrich & Rosati, Jingtian & Gongcheng and Ogier are serving as legal advisors
• Finnovate Advisors:
  • Ellenoff Grossman & Schole LLP is serving as legal advisor