Surf Air secures US$200m funding commitment on upcoming IPO

[LOS ANGELES] Surf Air Mobility, a membership-based private plane operator, has secured a US$200 million funding commitment from Global Emerging Markets Group (GEM) for when it goes public.

The Los Angeles-based company plans to go public in coming months through either a merger with a special purpose acquisition company (SPAC) or a direct listing, chief executive officer Sudhin Shahani said Thursday in an interview. An initial public offering is also on the table, he said.

A SPAC, also known as a blank-check company, raises capital from outside investors in an initial public offering (IPO), and then often raises more money in a private placement when a target company is acquired.

Surf Air's deal with GEM is unusual because the SPAC would typically take the lead role in raising any additional funds.

Surf Air might benefit from a decision Wednesday by the US Securities and Exchange Commission that will make direct listings more attractive. Companies going public on the New York Stock Exchange will be able for the first time to raise capital in what's being called a primary floor direct listing.

Surf Air can tap the first US$50 million of the commitment from Global Emerging Markets Group on the first day its stock begins trading publicly, Mr Shahani said. The investment from the Luxembourg-based firm can be drawn over three years after the debut, he said.

Surf Air offers scheduled flights on its fleet of turboprop aircraft among cities in California and Texas, as well as Las Vegas and Phoenix, according to its website.

Mr Shahani said 70 per cent of Surf Air's clients have remained on the platform through the coronavirus pandemic.

The company plans to use the proceeds to expand its service area and to develop and acquire technology to advance what Mr Shahani calls the industry's "inevitable electrification."

Surf Air has hired Fred Reid, formerly global head of transportation for Airbnb, as chief strategy officer. It also has added Wings West Airlines founder Carl Albert to its board, along with Edward Mady, the North American boss for the Dorchester Collection hotel chain.

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