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Why InterPrivate Acquisition (Aeva) Stock Is Higher Today

What happened

Shares of InterPrivate Acquisition (NYSE: IPV), the special-purpose acquisition company (SPAC) set to merge with Aeva, were trading higher on Monday after the company said that an investor has agreed to buy an additional $200 million worth of stock ahead of the merger.

As of noon EST, InterPrivate's shares were up about 4.5%.

So what

InterPrivate said that Sylebra Capital, a Hong Kong-based technology investment firm that already owns a stake in InterPrivate, has agreed to invest an additional $200 million ahead of InterPrivate's merger with Israeli lidar maker Aeva. (Lidar is a sensor technology with applications in robotics and other fields. Of note to auto investors, most experts believe lidar will be essential for self-driving vehicles.)

This new deal has two parts: Sylebra will buy about $150 million worth of shares for $11.50 per share, and then an additional $50 million worth of shares at a price of $16. Sylebra has agreed to hold the shares for at least one year after the merger closes.

The deal is a so-called PIPE, or private investment in public equity; it will close as part of the merger transaction. PIPEs allow outsiders to invest a known amount of cash in exchange for stock at an agreed price, which is typically discounted. They're common features of SPAC merger deals.

Aeva's lidar sensors are visible above the windshield of this test vehicle. Image source: Aeva.

This deal already had a $120 million PIPE, which was funded by existing Aeva investors at $10.00 per share and revealed when the merger was first announced in November.

Why is the stock up? Because this adds $200 million in cash to the total that the merged company will have available. Furthermore, Sylebra is investing at a valuation higher than in the original November PIPE.

Now what

With this investment, the post-merger company (to be called Aeva) will receive roughly $560 million in cash from the transaction. Aeva CEO Soursh Salehian said in a statement that the added investment will allow Aeva to accelerate its plan to get its "lidar on a chip" technology to market.

The merger is expected to close by the end of March.

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John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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