The EVgo IPO is the newest opportunity for investors to get into the EV market. But it’s not what many people might be thinking. Instead of manufacturing EVs, this company provides charging stations. And as a company meeting an overall industry need, investors are interested in EVgo stock.
But is EVgo a good investment opportunity? Here’s what we know…
EVgo IPO: The Business
Cathy Zoi founded EVgo in 2010. Zoi served as Chief of Staff for Environmental Policy under U.S. President Bill Clinton’s administration. EVgo is the leading electric vehicle (EV) charging network. It’s the first to be powered by 100% renewable energy, and it has an ambitious mission: expedite mass adoption of electric vehicles in the U.S.
EVgo plans to do that by “creating a convenient, reliable and affordable EV charging network for everyone.” The company currently operates more than 800 stations in 67 metropolitan markets across 34 states. That’s more than other public charging companies. And it serves more than 200,000 customers.
The EVgo IPO is one of the first few EV stock offerings of 2021. And investors aren’t strangers to the market. But EVgo stock is positioned a little differently than 2020s EV offerings.
The EV Market
In EVgo’s press release, the company highlights some aspects of the EV industry. Vehicle manufacturers are starting to turn towards developing EVs alongside the increase in battery manufactures. Together there’s a commitment of $300 billion industry-wide to these programs. EVgo also points out the industry expects the EV market to increase over 100 times by 2040.
The company expects both commercial and consumer market segments to drive market growth. Fleet electrification is growing due to decreasing costs of EV ownership, regulatory imperatives and more focus on Environmental, Social and Corporate Governance (ESG). ESG refers to criteria used to determine the sustainability and societal impact of an investment.
EVgo claims fast charging stations are expected to outpace demand for EVs. The market share is expected to grow to over 40% by 2040. But the company notes EVs are expected to represent only a third of all U.S. vehicles. EVgo look at this as an opportunity for multi-decade growth.
Just a few years ago, electric vehicles were considered niche. Today, improved technology, lower costs, greater selection, and a better appreciation for the performance of EVs is increasingly making them the vehicle technology of choice. With that, the need for fast charging is on the rise. An estimated 30% of Americans do not have access to at-home charging, and EVs will be increasingly deployed by fleets to transport goods and people in an environmentally-friendly way. Time is precious for all of us, so a public fast charging option with an expanding footprint like EVgo is essential to meet the rapidly growing needs of EV drivers of all types.
But that’s just the beginning for EVgo stock. The company has some recent developments that make the EVgo IPO look a little more appetizing.
EVgo Stock: Why Now?
The first thing to note is EVgo has strong partnerships. They range from manufacturers to site hosts to rideshare providers. Here’s a breakdown of some of EVgo’s partners and what the relationship holds for the future.
- General Motors (NYSE: GM) selected EVgo for a nationwide EV charging infrastructure. The company expects to add 2,700 stations to its network over the next five years. This will more than triple its current number.
- Tesla (Nasdaq: TSLA) works with EVgo to enable fast charging and expansion within the company’s network.
- Uber (NYSE: UBER) and Lyft (Nasdaq: LYFT) chose EVgo as their first EV charging provider.
- Governments and utilities across the country work with EVgo to increase infrastructure and create jobs.
In addition to forging partnerships and relations, EVgo also develops a suite of software-enabled products and services. This includes charging reservation capability, smart access to host sites, integrated retail promotions and loyalty programs. The goal is to create a differentiated and holistic offering for customers while creating low-cost revenue streams.
Funds from the EVgo IPO will help the company to expand infrastructure further, which can reach a greater market and potentially more partners. But like many EV companies of 2020, EVgo stock isn’t coming via a traditional IPO.
SPAC IPO: Climate Change Crisis Real Impact I
The 2020 EV trend continues in 2021 as companies choose a SPAC IPO to go public. A SPAC is a special purpose acquisition company, or blank-check company. It has no business operation and goes public to raise capital solely for the purpose of an acquisition. The SPAC usually has two years to pick a target. In this case, EVgo is the acquiree. And Climate Change Crisis Real Impact I Acquisition Corporation (CRIS) (NYSE: CLII) is the SPAC.
CRIS is excited for the upcoming merger. In the press release, CEO David Crane commented:
Starting from our IPO in September, we set out looking for a purpose-driven company making a meaningful contribution in the fight against climate change that was best in class in its sector. We are excited to have found that company in EVgo. We spent a substantial amount of time conducting extensive due diligence on EVgo, affirming our belief of its enduring first-mover advantage. It has a distinct and highly advantageous owner-operator business model, supported by strategic partnerships with key industry players singularly focused on an essential and growing factor necessary for supporting widespread EV adoption. EVgo’s comprehensive national DC fast charging network capable of charging every type of electric vehicle is unparalleled, and we are proud to be a part of its ongoing success.
And they’re not the only ones. EVgo is owned by LS Power, which acquired the company in 2019. It’s Co-Head of LS Power’s Private Equity and Chairman of EVgo David Nanus stated:
EVgo is a crown jewel in our portfolio, and is one of the LS Power businesses leading the charge toward decarbonization. EVgo’s extensive nationwide network and deep relationships with its customers and other stakeholders create a real competitive advantage for the company, and this business combination, which will both fully fund and accelerate the company’s growth plans, positions EVgo to further strengthen its market-leading position.
With strong investor support, EVgo stock could see high demand. So for those interested in the EVgo IPO, let’s look at the details.
EVgo IPO Details
The merger values EVgo at $2.6 billion. The offering consists of a $10 PIPE price. Net proceeds are expected to be $575 million. It will consist of $400 million from the PIPE and about $230 million from CRIS’ IPO trust. Both LS Power and EVgo management will roll 100% of their equity into the new company, representing about 74% of the company upon closing. For more information on EVgo, you can look at their Investor Presentation.
EVgo stock will trade on the NYSE under the ticker symbol EVGO.
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What is the EVgo IPO date? Although there is no confirmed date, the company says investors can expect EVgo stock some time in the second quarter of 2021.