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EV startup Faraday in SPAC merger talks to go public: sources

FF91.jpg
Faraday has said its flagship vehicle, known as FF 91 (above), will be available for sale about a year after the close of a successful round of funding.

[NEW YORK] Faraday & Future, an electric-vehicle (EV) startup, is in talks to go public through a merger with Property Solutions Acquisition Corp, a blank-cheque firm, according to people with knowledge of the matter.

The special purpose acquisition company (SPAC) is seeking to raise more than US$400 million in equity to support the transaction, which is slated to value the combined entity at around US$3 billion, the people said. As with all deals that haven't been finalised, it's possible that terms change or talks fall apart.

A Faraday spokesperson didn't respond to multiple requests for comment. A Property Solutions representative declined to comment.

Los Angeles-based Faraday, led by chief executive officer Carsten Breitfeld, was founded by Jia Yueting, an entrepreneur who in October 2019 filed for bankruptcy in the US after running up billions of dollars in personal debt. His efforts to build a business empire in China spanning interests from streaming to TVs saw him borrowing against pledged shares, leaving him on the hook for US$2.3 billion in claims, according to the filing.

Mr Jia emerged from bankruptcy after setting up a creditors trust and transferring all of his shares in the electric vehicle company to it, he said in a July statement posted to the electric vehicle company's website. He said as much as 10 per cent of the trust will go to compensating shareholders in Leshi Internet & Technology Corp, a now delisted unit of his conglomerate, and that he no longer holds any equity in Faraday but remains an employee. Approval of the plan cleared the way for the company to work towards its equity financing targets, the company said.

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Faraday this month appointed Zvi Glasman, the former chief financial officer of Fox Factory Holdings, as its chief financial officer. It has said its flagship vehicle, known as FF 91, will be available for sale about a year after the close of a successful round of funding.

The ranks of carmakers seeking to compete with Tesla in electric vehicles are heavily populated by Chinese startups. Investors were gripped by a mania for all things related to EVs in 2020, boosting Chinese car company Nio's valuation above those of General Motors and Ford Motor. Xpeng raised US$2.2 billion from a follow-on share sale in December just a few months after its US$1.7 billion initial public offering (IPO), and even Internet giant Baidu was getting in as it planned to team up with carmaker Geely Automobile Holdings to make electric vehicles for the Chinese market.

Property Solutions, led by chairman and co-chief executive officer Jordan Vogel, raised US$230 million in a July 2020 IPO. The company, which has the ability to pursue a combination in any industry, said at inception that it intended to target firms that service the real estate industry, including property technology.

Electric-vehicle companies including Nikola and Fisker have gone public in recent years by merging with blank-cheque firms.

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