VW-backed battery maker QuantumScape to go public at $3.3 billion valuation

(Reuters) - QuantumScape, the 10-year-old Silicon Valley battery startup backed by Volkswagen AG, said on Thursday it plans to go public through a reverse merger with Kensington Capital Acquisition Corp with an enterprise value of $3.3 billion.

FILE PHOTO: Employees clean a new car after a ceremony marking start of the production of a new electric Volkswagen model ID.3 in Zwickau, Germany, November 4, 2019. REUTERS/Matthias Rietschel/File Photo

San Jose-based QuantumScape, a 2010 spinout from Stanford University, said it will form a joint venture with VW to produce solid-state battery cells, starting in 2024, for the German automaker’s electric vehicles, and eventually for other carmakers.

“Our ambition is to be a (battery) supplier to the industry as a whole,” QuantumScape founder and Chief Executive Jagdeep Singh said in an interview.

QuantumScape is the latest transportation startup to tie up with a special-purpose acquisition company, or SPAC. Recent SPAC-backed transactions include Lidar maker Luminar, electric truck maker Nikola, electric shuttle maker Canoo and electric car maker Fisker.

A SPAC is a shell company that raises money through an initial public offering to buy a private operating company and take it public in a reverse merger.

Shares of the Kensington SPAC jumped 68% to $17.80 at mid-day.

VW has committed more than $300 million to QuantumScape. Other corporate investors include Shanghai Auto, which is partnered with VW in China, and German auto supplier Continental AG.

Venture backers include Bill Gates, Khosla Ventures and Kleiner Perkins. The Qatar Investment Authority also participated in the latest funding round.

Ahead of the merger announcement, QuantumScape raised $500 million from institutional investors, led by Fidelity Management & Research.

The SPAC deal is expected to close in late 2020, when the new company will trade on the New York Stock Exchange under the ticker symbol QS.

QuantumScape’s lithium-metal battery uses a solid ceramic electrolyte which Singh said is safer than a conventional liquid electrolyte. The design replaces the conventional graphite/silicon anode with a lithium-metal anode, speeding up the recharge to 80% capacity in just 15 minutes. Also, its energy density is much higher, exceeding 400 watt-hours per kilogram, which far surpasses 250 Wh/kg for the best current lithium-ion batteries.

Kensington is a SPAC headed by investment banker Justin Mirro, a specialist in transportation-related deals who will join QuantumScape’s board. Kensington’s directors include Tom LaSorda, former vice chairman of Chrysler; Don Runkle, former vice chairman of Delphi, and Matt Simoncini, former CEO of Lear Corp.

Reporting by Paul Lienert in Detroit; Additional reporting by Joshua Franklin in New York; Editing by David Gregorio, Matthew Lewis and Richard Chang