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Embraer flying taxi unit Eve, valued at $2.9 billion, to list on NYSE

The transaction values Eve's equity at $2.9 billion and will include the combination with Zanite Acquisition Corp

Photo: REUTERS/Roosevelt Cassio
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  • Embraer said that Florida-based Azorra had ordered 200 electric vertical take-off and landing (eVTOL) aircraft from Eve;
  • Eve, listed on NYSE under the ticker EVEX, will have a $512 million cash position that will be used to develop Eve’s flying taxi.

Brazilian planemaker Embraer has agreed to combine its electric aircraft subsidiary Eve with Zanite SPAC and list it on NYSE, the companies said on Tuesday.

The transaction values Eve’s equity at $2.9 billion and will include the combination with Zanite Acquisition Corp and an additional investment by a group that includes Embraer, Zanite, financial investors and strategic partners such as Azorra Aviation, BAE Systems, Republic Airways, Rolls-Royce and SkyWest.

READ ALSO: XP raises $200 million on SPAC Nasdaq listing

After the transactions, Eve, listed on NYSE under the ticker EVEX, will have a $512 million cash position that will be used to develop Eve’s flying taxi. The company already has an order pipeline of more than $5 billion.

Among the customers with pre-orders are lessors, helicopter operators and ride sharing companies.

READ ALSO: SPAC hunt begins for startups that want to go public in Latin America

After announcing Eve’s listing, Embraer said in a separate filing that Florida-based Azorra had ordered 200 electric vertical take-off and landing (eVTOL) aircraft from Eve.

U.S. Republic Airways has placed an order for up to 200 evTOLs, the Brazilian company added, noting it aims to implement an eVTOL network throughout the U.S. Central and East Coast markets.

Skywest, Embraer also said, has ordered 100 electric aircraft from Eve looking to develop a regional chain in the United States.

Embraer will own 80% of Eve after the SPAC combination and additional investment from the group. Eve’s cash position is expected to be enough to fund the flying taxi development through its certification, expected for 2025, Embraer CEO Francisco Gomes Neto told Reuters.

READ ALSO: SaaS company Semantix to go public via SPAC merger with Alpha Capital

Gomes Neto said in an interview that Eve will probably have multiple production sites to deliver to customers in different continents, but the locations have not yet been chosen. Gomes Neto expects Eve to reach $4.5 billion in revenue by 2030, with around 15% of the global urban air mobility market.

The production phase will probably be funded by debt, said Eve’s co-CEO Jerry DeMuro, former BAE Systems CEO. Eve’s other co-CEO is Andre Stein, an Embraer executive for two decades.

Embraer will provide infrastructure to Eve, including the allocation of engineers to the projects, testing grounds and simulation equipment.

“This will allow us to lower the costs,” DeMuro said in an interview.

READ ALSO: Embraer’s Eve receives Brazil order for up to 100 VTOL’s

What is a SPAC?

The SPAC, also called a “blank check company,” provides private businesses a path to enter the public stock market more quickly than an IPO process — it takes a few months, while an IPO can take more than a year — by using mergers and acquisitions (M&A) regulatory arbitrage, which is simpler than the rules for listing a company on the stock exchange. In other words, you trade one set of regulations for another. 

Source: LABS

Generally, SPACs are managed by corporate leaders, successful entrepreneurs, and well-known investors who create a company without any actual operations. These managers (also called sponsors) take the SPAC to the market through a regular IPO in a process coordinated by investment banks. This process, as a whole, is easier since the company does not have a history to audit. It was born with a single purpose: to merge with another company. 

READ ALSO: Embraer’s Eve announces partnership with Microflite to develop urban air mobility in Australia

Investors, generally unfamiliar with LatAm startups, believe in the sponsor’s experience to filter the prospective companies and make a good deal. Investors buy SPAC shares, traditionally for $10, despite not knowing with which company the SPAC will ultimately merge. 

After the IPO, the SPAC starts looking for a target company that wants to go public. Under the regulation, the vehicle can extend its deadline but, generally, the SPAC has two years to find a company and make a deal. 

If that doesn’t happen, the money goes back to the investors and the SPAC dissolves. But if the SPAC merges with a company that wants to go public, that target company gets its spot on the stock exchange and the SPAC ticker turns into the target company’s name. 

READ ALSO: XP’s bank plans financial services marketplace, says CEO

Since SPAC follows the M&A rule, it can only merge with a single company. After the transaction, investors in the blank-check firm receive shares in the newly listed company and SPACs managers usually get 20% of the shares. To take other companies to the public market, managers can create other SPACs vehicles, numbers II, or III, for instance. 

Recall the latest tech and growth-oriented Latin American SPACs, according to LABS and Italian professor Daniele D’Alvia, CEO and founder of SPACs Consultancy, knowledge:

  • XPAC – $200 million on Nasdaq
  • Alpha Capital Acquisition – $200 million on Nasdaq
  • Excelsa Acquisition Corp – $200 million on NYSE
  • DILA Capital Acquisition – $50 million on Nasdaq
  • Valor Latitude – $200 million on Nasdaq
  • SoftBank’s LDH Growth I – $200 million on Nasdaq
  • Andina Acquisition Corp I – $42 million on Nasdaq, signed in 2013 a merger with Tecnoglass
EBANX LABS
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