Here’s Why This Real Estate Disruptor Chose a SPAC to Go Public
The SPAC boom we saw in late 2020 and early 2021 may have cooled off a bit, but there are still some high potential companies that are choosing the SPAC route to go public. A particularly interesting example is the real estate offer “iBuyer” Offerpad, which is to merge with the blank check company Acquisition of Supernova partners (NYSE: SPNV). In this Fool Live video clip recorded on August 23rd, Fool.com contributor Matt Frankel, CFP, sits down with Brian Bair, CEO of Offerpad, to find out why his company chose this path.
Matt Frankel: I would like to briefly talk about your IPO soon. You are not officially listed yet, despite trading as a public company for those familiar with the SPAC model. Why did Offerpad use this backdrop instead of a traditional IPO? By the way, you’re not the first iBuyer to do that. It’s apparently an engaging process and why Supernova in particular.
Brian Bair: I know that was it. During that time, especially when the stock market was extremely competitive and we had a lot of different SPAC companies that wanted to sponsor us to get us public. We looked at everything, we looked at staying private, we went public the traditional way, and we looked at the SPAC process. For me the most important thing was what is the focus on the business and our way forward? Because what we’re doing and changing people’s view of real estate is not a quick game. There’s a lot of education and a lot of market share that people can get. But the only thing about the SPAC process was that it was a much faster route. There isn’t as much as going the traditional route or staying particularly private. Basically, we wanted to get the car onto the sea as efficiently and as quickly as possible so that we could concentrate on continuing the business. We got our SPAC sponsor, Supernova, led by Spencer Rascoff and the group over there. Was a perfect sponsor for us because they were operators, understood the industry in general, understood the space as a whole, but also understood the hypergrowth. Not only do we want to look for our SPAC sponsor to get ourselves public, but also what we can learn from the SPAC sponsor to make Offerpad better. They really check every box on this end and they have been great partners.
Frankel: Another benefit of going public via the SPAC route is of course cash. In general, many companies raise more money through the SPAC IPO than through a traditional IPO. You’re getting around $ 650 million just to prove it. How do you intend to do that? Are you going to use this to expedite your home purchase? To expand your technology? Or how do you want to implement that?
Bair: Yes, it’s a little bit of everything. We look at it in phases, on the one hand we are currently hypergrowth. At the moment we have announced 21 markets across the country. We are in 1,500 cities and towns, as we announced. We have just announced four markets, and seven markets will continue to expand this year. There is some market growth, but then there is also the additional market penetration to increase our buy box of the houses we are in and the houses you buy in our current markets. Substantial investments are also made in our product and technology. I’ve already hinted at it, but how Offerpad will win depends on the products you allow the consumer to use. This is completely different from what they can get in what I would say the more traditional market. We can talk for an hour about all of the other products we’re going to be announcing, but that’s something we’re really excited about because most of all, the consumer wins and there will be massive benefits for Offerpad as well.
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