Part of the iconic Lotus brand is heading to the stock exchange.
Overnight the company announced it will list Lotus Technologies on the NASDAQ stock exchange, but rather than using a traditional initial public offering (IPO), it will be merging with L Catterton Asia Acquisition Corp.
This is a firm backed by Bernard Arnault, one of the founders of LVMH Moët Hennessy Louis Vuitton, and, according to Forbes, the world’s richest person.
By merging with a special purpose acquisition corporation (SPAC), majority shareholder Geely avoids the hassle and scrutiny of the regulatory fillings associated with an IPO. Geely has already used this method for listing Polestar, but used a traditional IPO to float part of Volvo Cars.
The deal is said to value Lotus Technologies at US$5.4 billion ($7.7 billion), but thanks to the brand’s confusing corporate structure a core part of the Lotus brand and mythology will remain off market for now.
Existing shareholders in Lotus Technology, such as Geely, Etika Automotive and Nio Capital, will retain an 89.7 per cent stake in the newly merged company, and are expected to remain in place for the foreseeable future.
Lotus Technologies houses all of the brand’s technology, sales and marketing functions, and describes itself as “dedicated to delivering luxury lifestyle battery electric vehicles including SUVs and sedans”.
It is based on a specially developed EV architecture which will go on to underpin another crossover, as well as a large sedan.
As with other sporting marques, sales of the Lotus lifestyle range are expected to handily eclipse its sports cars, and bring in the bulk of the revenue and profit.
According to the firm, it will continue pursuing its “asset-light business model”, and focus on vehicle development and sales. Manufacturing for the Lotus lifestyle vehicle range will take place in China at a Geely-owned factory that has an annual capacity of 150,000 cars.
Currently Lotus Technology owns research and development facilities in Coventry, UK, and Frankfurt, Germany, as well as three centres in China, located in Wuhan, Shanghai and Ningbo. The company says it will keep its headquarters in Wuhan.
Lotus Cars, which owns the factory in Hethel, UK, and produces sports cars, such as Emira and Evija, is not a part of today’s floatation announcement.
While Lotus Cars works closely with Lotus Technology, it is separately owned by Geely and Malaysia-based Etika Automotive. In 2017 Geely bought a 51 per cent stake in Lotus, as well as 49 per cent of Proton, from Malaysian conglomerate DRB-HICOM.
As part of today’s deal, Lotus Technologies will become the global distributor for Lotus-branded vehicles, and has the option to buy out Lotus Cars in the future, if it so wants.
Money raised from the listing will be used for vehicle development, expanding the brand’s distribution network, and “general corporate purposes”.