Original article published in Reuters
February 16, 2021 – Joshua Franklin
Feb 16 (Reuters) – Li-Cycle Corp said on Tuesday it will go public through a merger with blank-check acquisition company Peridot Acquisition Corp in a deal valuing the recycler of lithium-ion batteries at $1.67 billion.
The initial public offering is a bet on the growing need to recycle used batteries as well increasing demand for lithium-ion power sources for emerging products like electric vehicles.
The merger is expected to provide Li-Cycle around $615 million in additional funding, which it plans to use to build more facilities to recycle and repurpose batteries.
Peridot will provide $300 million, with the rest coming from a private investment in public equity, or PIPE, transaction. Investors in the PIPE include Neuberger Berman Group LLC, Franklin Templeton and commodity trading firm Traxys, which is also a strategic partner for Li-Cycle.
“In one fell swoop this transaction will fully fund our business plan for the coming years,” Li-Cycle co-founder and Chief Executive Ajay Kochhar said in an interview.
Reuters had reported on Monday that Li-Cycle and Peridot were nearing a merger deal.
Founded in Toronto in 2016, Li-Cycle recycles scrap and end-of-life lithium-ion batteries, which power products such as electric cars, medical equipment and smartphones, for reuse in battery production and other applications. Its investors include Moore Strategic Ventures and CC Industries.
About 1.2 million tons of batteries are expected to end their life cycle in 2025, followed by 3.5 million tons in 2030, according to an estimate from market research firm IHS Markit.
Peridot, a special purpose acquisition (SPAC) led by investment firm Carnelian Energy Capital Management, raised $300 million in an IPO on the New York Stock Exchange in September.
“It (Li-Cycle) is really a business that is uniquely suited from the SPAC perspective because they have a very specific use of proceeds and their need,” said Peridot Director Preston Powell.
A SPAC is a shell company that raises money in an IPO to merge with a privately held company that then becomes publicly traded. SPACs have emerged as a popular IPO alternative for companies to go public with less regulatory scrutiny and more certainty over the valuation and proceeds.