VVPR - Tembo e-LV $838 Million SPAC IPO Set To Unlock Shareholder Value For VivoPower (NASDAQ:VVPR)
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As the world’sshift to EVs gathers more pace and the market rebounds from short termdemand weakness, one company that has attracted significant investorinterest is VivoPower International PLC (NASDAQ:VVPR) . Thesustainable energy solutions company, which provides conversion kitscontaining all the parts needed to convert a vehicle from an internalcombustion engine to electric, has seen its share price rise based ona number of tailwinds.
For starters, VivoPower subsidiary Tembo E-LV revealed that itwould be going public by merging with Cactus Acquisition Corp.(NASDAQ:CCTS), a SPAC, in a deal with a pre-money indicative valuationof $838 million. CCTS will issue 83.8 million shares in exchange forTembo shares at $10 per CCTS share.
In addition to that, a special dividend of a totalof 16.76 million Tembo shares, or about 20% of the 83.8 millionshares, will be distributed to VivoPower International PLC(NASDAQ:VVPR) shareholders, who will receive five Tembo Groupshares for each VivoPower share held. According to the most recentquarterly filing, CCTS has $25 million in cash on its balancesheet.
Ifeverything plays out as expected, then this deal would unlock massivevalue for VivoPower shareholders. That is because VivoPwer boughtTembo for about $7.1 million in cash back in 2021, and this dealvalues it at more than 120x. This deal has not only illustrated theleadership’s commitment to increasing shareholder value but also themarket’s willingness to pay a premium for EV companies solving theEV problem in a different way.
Although VivoPower International PLC(NASDAQ:VVPR) stock has already rallied significantly, it is clearthat there is still more room for upside. Just to recap, here’s asimple breakdown of the deal and how it would translate to a highershare price for VivoPower shareholders.
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VivoPower International PLC (NASDAQ:VVPR) shareholdersget 5 Tembo shares worth $10 for every share held.
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Assuming a conservative scenario where theIPO raises only 10% of $838 million, that would translate to at least$83.8 million in market cap for vivo power.
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VivoPower has about 3.5 million sharesoutstanding, which would translate into a share price of roughly $23.
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That means that VivoPowercould make investors triple-digit returns once this deal closes, andthat is without taking into account the dividendshares.
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At $1 per dividend share, that would translate to an additional$5 per share held for VivoPower shareholders.
Ultimately, even if the Tembo share price upon IPO is only $1,that would imply that VVPR shares are worth $28, including the valueof dividend shares.
To further illustrate the upside potential in the VivoPowerInternational PLC (NASDAQ:VVPR) stock, consider this: The companyrecently received a $10 million direct investment from an Emiratibased family office associated with the ruling family of Dubai, at a$120 million pre-money valuation. Based on this fact , the value pershare of VVPR could be $40 per share.
Share buyback and restructuring
Another importanttailwind that has contributed to sending VivoPower's share pricehigher is the company's recent announcement that its board hadauthorized a capital management strategy including a stock buybackprogram that would allow the company to purchase up to $5 million ofits outstanding shares. These buybacks would be funded using thecompany’s proceeds from the sale of businesses and assetdivestitures, including spin-offs like the Caret business unit’sportfolio. The Caret business unit’s portfolio represents up to tensolar projects totaling 586 MW-DC at varying stages ofdevelopment.
Lastweek, VivoPower International PLC (NASDAQ:VVPR) also announcedthat it entered into a definitive asset sale agreement for the sale ofone of its non-core business units, Kenshaw Electrical, to ARA GroupLimited, a leading diversified industrial services group based inAustralia, for a total of A$5 million.
Exploding addressable markets
VVPR is well positionedto capitalize on the increasing demand for EVs in some of the fastestgrowing markets right now like southeast Asia, the middle east andAfrica. According to Mordor Intelligence, the Middle East and AfricaEV markets were valued at about $3.33 billion in 2024 and are expectedto be worth $9.42 billion by 2029, representing a CAGR of23.20%.
Tembo’sconversion kits have attracted substantial traction among consumers,as illustrated by the company securing a commitment of 5000+ kits andan order pipeline of 10,000+ in 2023. Those included an MOU in Jordanfor 1,000 kits, opening a path to the Middle East, which is thelargest Landcruiser market, and a definitive agreement in Kenya for4,000 kits, providing entry into second-hand vehicle segments.
Furthermore, Tembosigned a definitive joint venture agreement with Francisco MotorCorporation to develop and supply electric utility vehicleelectrification kits for a new generation of electric jeepneys(e-jeepneys) in the Philippines.
This is another significant growth opportunity,considering that the Electric Vehicle Association of the Philippines(EVAP) estimates that the cumulative sales of e-vehicles in thecountry will reach 6.6 million units by 2030, driven by favorablegovernment policies. In fact, e-vehicles are now exempt from excisetax, and a recent Executive Order scrapped the tariff rates ofcompletely built-up imported e-vehicles for five years to help thembecome more cost-competitive in the country.
Takeaway
Going forward, it'sclear that VivoPower International PLC (NASDAQ:VVPR) has brightprospects ahead, as illustrated by the fact that according to arelease May 6, executive chairman and CEO Kevin Chin again increasedhis individual shareholding in the company by adding an additional100,000 shares (about 2.7% of the outstanding shares) to increase hisshareholding to 13.5%, signaling his confidence in the company.
For more information,please visit https://vivopower.com/
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