Wheels Up set to go public via Spac merger

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A private jet charter start-up backed by investors including Serena Williams and Lance Armstrong plans to go public through a merger with a “blank check” company started by the former head of a company’s Asian division private equity fund co-founded by LVMH.

The deal would give US company Wheels Up, an online private jet booking platform, an enterprise value of $ 2.1 billion. It is expected to close in the second quarter of 2021 and would mark the first private aviation platform to be listed on the New York Stock Exchange.

The merger would generate up to $ 790 million in cash, including up to $ 240 million from Aspirational Consumer Lifestyle Corp, the special purpose acquisition company. launched in September by Ravi Thakran, former chef of L Catterton Asia. LVMH, the world’s leading luxury goods group, and L Catterton, the private equity firm co-founded by LVMH, hold minority stakes in the vehicle.

Investors – including asset managers T Rowe Price, Fidelity and Franklin Advisors – will also provide $ 550 million of private investments in public stocks at $ 10 per share.

The proceeds will be used to write off some of Wheels Up’s debt as well as to fund technology investments, transactions and expansion in markets with developed infrastructure including the Middle East, China and Japan, said Mr. Thakran, founder of the Asia 3.0 private equity fund.

“Initially, when you land in Asia, especially where infrastructure and local connection will be needed, it’s best to set up a joint venture. [to] gain experience before jumping [in],” he added.

Kenny Dichter, Founder and CEO of Wheels Up, hopes the merger will help transform the digital platform, launched in 2013, into “Sky Uber”.

The airline industry has been hit hard as countries have closed their borders to contain the coronavirus pandemic. But Mr Dichter said 2020 was Wheels Up’s best year for new memberships. “While business flights were down, personal thefts were up,” he said.

The cost for Wheels Up’s individual membership for the first year, including membership fees, is $ 17,500, while annual memberships start at $ 8,500 starting in the second year.

Paul Yong, equity analyst at DBS, said the pandemic has boosted demand for private charter jets “As the rich seek to travel more safely,” adding that the surge in demand could persist if “luxury travelers permanently switch to flying private planes” in the wake of Covid-19.

Spacs, launched amid the wave of “blank check” corporate announcements on Wall Street in 2020, have become a major driver of listing activity. Spacs typically have two years to find a business to go public using the product they collect. Last week they concluded mergers worth over $ 15 billion in one day.

The structure gives companies a faster and cheaper way to go public than initial public offerings. But the Spacs were critical lack of transparency and offers better returns for sponsors than for shareholders.

Mr. Thakran will launch two more Spacs, one in a few days, with a similar objective to the first vehicle: European or American companies in the consumer sectors, in particular welfare, hospitality or spirits, who wish to develop in Asia.

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