Although the number of SPAC offerings on Wall Street has shrunk significantly compared to the highs of 2020-2021, companies that have already raised money from the public continue to look for and find merger targets. This week it was reported that the SPAC company associated with the American investment bank Roth (Roth CH Acquisition IV) is merging Tigo Energy, led by veteran Israeli entrepreneur Zvi Alon, who serves as the company’s chairman and CEO.
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Tigo deals in the field of storage solutions for solar energy and will merge according to a value of 600 million dollars before the money and a value of 730 million dollars assuming that there will be no redemptions from the SPAC investors. The deal is expected to close in the second quarter of 2023.
Zvi Alon previously managed the software company NetManage, which he founded in 1990 as an American company with development in Israel, which traded on Wall Street and was sold in 2008 for approximately $70 million. He was also one of the founders of the Internet provider Netvision, which his wife Ruth managed and also founded the California-Israel Chamber of Commerce.
SPAC companies are inactive companies that raise money in the stock market in order to merge into an existing company within a predetermined period of time (usually two years) or they will be forced to return the money to investors. For private companies, merging into a SPAC is a way to reach the public market, not through an IPO. The SPAC company that merges Tigo was issued in the summer of 2021.
Tigo was founded in 2007 by Ron Hadar and Sam Arditti. According to the company, it provides critical solutions to improve safety, energy production and operational costs for the solar energy sector. This is similar to another Israeli company – Solaredge, which is traded on Nasdaq at a value of 16.7 billion dollars. Another competitor is the American Enphase which is traded at a value of 42.1 billion dollars.
Tesla among the customers
In the presentation published by Tigo, she writes that the two companies (Solaredge and Enphase) dominate the American domestic market for solar inverters, and that customers are looking for additional suppliers; Today, most of Tigo’s revenues are from Europe and the Middle East. In terms of multipliers, the EV (activity value) multiplier for the expected revenues in 2022 is 7.5 at Tigo, compared to 5.3 at Solaredge and 19.7 at Enphase.
In the presentation, Tigo estimates that it is targeting a rapidly growing $115 billion market and states that one of its customers is Tesla. Unlike many companies that have merged or are in the process of merging into a SPAC, Tigo shows profitability based on EBITDA (earnings excluding interest, tax, depreciation and amortization) that is expected to total this year at $1.5 million (or $4.1 million excluding capital rewards and merger costs), while the loss The net will be $2.6 million. The company’s revenues will reach 80 million dollars this year.
Investors in Tigo include, among others, Bessemer, Clal and the Generation Fund of former US Vice President Al Gore. Another investor is Alon Ventures, the family investment company of Zvi Alon who, as mentioned, manages Tigo. According to IVC data, Alon’s only portfolio company Ventures is Tigo, and in the past it also owned Blaze-Meter, which was acquired several years ago.