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  • Writer's pictureHahn Lee

Are SPACs the Next Proptech Exit Vehicle?

September 15, 2020

This morning, we woke up to the announcement that Opendoor, the industry's first and largest iBuyer, is becoming a public company via a SPAC (Special Purpose Acquisition Company) transaction. The deal values Opendoor at $4.8 billion and includes an additional infusion of capital that positions Opendoor for future growth.

Specifically, Opendoor will receive $414 million from the capital generated from Social Capital Hedosophia II’s April IPO (i.e., the SPAC). Additionally, a group of investors, including Social Capital’s Chamath Palihapitiya and funds managed by BlackRock, agreed to infuse another $600 million through a PIPE (Private Investment in Public Equity). The deal is expected to close in 4Q20.

Based on the proforma enterprise value ($4.8 billion), the implied deal multiple is 1.0x CY19 revenue and 0.5x CY23 revenue. Below is a brief deal summary provided by Opendoor.

Opendoor Transaction Summary


Earlier this summer, Porch, a home services company that plays in the broader proptech space, also announced that it would go public via a SPAC. That deal valued Porch at $523 million, (estimated equity value of $728 million, $205 million in cash and no debt). The valuation implies a 4.4x multiple based on 2021E revenue of $120mm. Similar to the Opendoor deal, the Porch transaction involved a PIPE of $150 million, which will supply additional funds for future expansion. The deal is expected to close in 4Q20.

Porch Transaction Summary

SPACs Gaining Momentum

Year to date, there have been 97 SPAC IPOs that have raised $38 billion, up from 59 total deals that raised $13.6 billion in CY19. The chart below illustrates the increasing volume of SPAC IPOs. As SPACs gain momentum, I expect more emerging proptech companies to use SPACs as a quicker path to reaching the public markets.

More next time…


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