A full guide to Quanergy Systems and its SPAC

Quanergy Systems is a tech company that rolls out perception laser-based software for a wide range of use cases. It is planning a merger with a SPAC as a route to going public.

Charts (2)

What does Quanergy do?

Quanergy was founded in Sunnyvale, California in 2012. It develops AI software and control systems that allow other companies to develop 3D mapping, security, smart spaces, social distancing initiatives and industrial automation.

Its tech helps companies across various industries identify areas in which they can improve safety and efficiency while reducing costs.

For example, a number of airports around the world are using Quanergy’s tech to identify pressure points. Queues build up in different parts of airports at unpredictable times and Quanery provides intelligence that can detect, track and measure queues, and help management re-align manpower.

It is at the forefront of LIDAR (laser imaging, detection and ranging). This tech has applications in a wide range of fields including surveying, geology, seismology, forestry and laser guidance.

LIDAR tech is hugely important in driverless car systems, a sector that is benefiting from heavy investment by big brands.

What are Quanergy’s SPAC plans?

A number of tech firms are seeking tie-ups with SPACs to facilitate a route towards going public. SPAC stands for Special-Purchase Acquisition Company and the intention is to end up creating something similar to an initial public offering.

SPACs are effectively shell or “blank-cheque” companies that enable the process and ensures its smooth execution, and it does so through a process that, in essence, is a reverse merger.

In the case of Quanergy, the SPAC involved is CITIC Capital Acquisition Corp, a Chinese firm affiliated with the country’s largest state-owned investment conglomerate.

The deal, which puts an implied valuation on Quanergy at $1.4 billion, is expected to close in the second half of 2021. After closing, the transaction will inject the LIDAR specialist with around $278 million in pro forma net cash, including $40 million in private investment in public equity (PIPE) funding.

Why did Quanergy choose to proceed to a SPAC?

Quanergy has endured a circuitous road to joining the NYSE. In 2016, the company generated substantial excitement after it announced it had developed a LIDAR system for just $250. At the same time Velodyne was selling a rival system for $75,000).

This news propelled the company to unicorn status and sparked talks of a potential initial public offering, reported on major channels such as Bloomberg.

But excitement was tempered when Quanergy hit technical roadblocks. CEO and co-founder Louay Eldada left in January 2020 and Kevin Kennedy took over as permanent CEO three months later. 

Quanergy says it has more than 350 customers and 40 partnerships globally, across both the automotive and internet of things sectors. Its investors include automakers Daimler and Geely, as well as Samsung and Enterprise.

Who are Quanergy’s rivals and what are they doing?

Quanergy is not the first LIDAR company to go public via a SPAC merger. Others include AEye, which will merge with CF Finance Acquisition in a $2 billion deal, and Volvo-partnered Luminar at a $3.4 billion valuation.

Among driverless tech companies, a slew of firms are also proceeding to SPACs. Embark is one such enterprise. Plus, formerly known as Plus AI, announced its own SPAC deal last month while TuSimple Holdings took the more traditional initial public offering route and started trading in April.

Amazon has placed an order for up to 1,000 autonomous truck systems from Plus and has acquired the option to buy a stake in the company. Autonomous freight hauling is a big growth area, featuring firms such as Alphabet-backed Waymo and other venture-funded start-ups like Kodiak and Aurora.

What are Quanergy’s plans for the future?

Quanergy says the proceeds from the SPAC transaction will be used to accelerate research and development, pay down debt and fund working capital. Upon closing, Quanergy will be listed on the NYSE under the ticker symbol “QNGY.”

Because its SPAC partner is Chinese, Quanergy must file for clearance with the Committee on Foreign Investment in the United States. The company anticipates CFIUS will provide approval for the deal because CITIC would keep its stake in the company below 10%, and Quanergy does not record any personal driver data.

What are Quanergy’s revenue forecasts?

Quanergy forecasts annual revenue to be $549 million by 2025 from a current $7m a year, with around half of that coming from mapping, security and smart spaces. Industrial automation and the automotive industry accounts for the rest.

Kennedy, who has a long career in tech behind him, says his firm proceeded to a SPAC because “access to capital is a key ingredient to success and we are going to put our heads down and continue to execute.”

Speaking to Benzinga’s SPACs Attack podcast, he added: “One of the reasons I was attracted to the company was [its connection to] very big markets in the future. This company needed to scale and I have experience in helping companies to do that.”

How to trade stocks at City Index

You can trade stocks with City Index using spread-bets or CFDs, with spreads from 0.1%. Follow these easy steps to start trading now.

  1. Open a City Index account or log-in if you’re already a customer.
  2. Search for the company you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade

Build your confidence risk free

More from IPO

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.