Fifth Wall Launches First Proptech SPAC With $345M IPO

Proptech investment firm Fifth Wall this past week celebrated the closing of the $345 million IPO for the venture capital firm’s first special purpose acquisition company (SPAC), the built-world-oriented Fifth Wall Acquisition Corp I.

Trading on the NASDAQ exchange under ticker symbol FWAA, the SPAC is a blank-cheque company incorporated for the purpose of achieving a future merger, asset acquisition or similar deal.

Fifth Wall co-founder and managing partner Brendan Wallace said the initial public offering was increased from the original target of $287.5 million because of “extraordinarily high public market demand”.

“We’re obviously humbled by this reception and thrilled that the market has such confidence in the SPAC,” Wallace said in a blog post. “We believe that the SPAC is well-positioned to introduce to the public markets the very same calibre of real estate technology company that is characterised by Fifth Wall’s portfolio of market-leading proptech businesses, some of which have now gone on to become unicorns.”

Fashionably Fast

SPACs have gained popularity as a way to bypass the traditional IPO process and quickly gain access to public capital markets. 2020 saw 248 SPAC IPOs raise a record $83.3 billion, up sharply from $13.6 billion in 2019.

For Fifth Wall, which has around $1.3 billion in assets under management across strategies including climate tech and retail, as well as real estate, the trendy fund raising approach allows for a new investment avenue after the firm raised $503 million for its second private equity proptech fund in 2019.

In Asia, the Los Angeles-based firm has partnered with Singapore’s Keppel Corporation, City Developments Ltd and GLP, while tying up with Gaw Capital and Vanke in Greater China.

The advantage of a SPAC to investors is that the IPO proceeds are held in trust and are returned to the shareholders if the SPAC fails to complete a merger or acquisition within a certain window. In a warrant-free SPAC, shareholders forgo the right to buy shares at a specific price on a future date.

FWAA intends to focus on industries that complement its management team’s background, which is largely in real estate, and to capitalise on the ability of the team to identify and acquire a technology business focusing on verticals of the real estate industry.

Wallace, who founded Fifth Wall with Brad Greiwe in 2016, said that with the ecosystem of real estate technology companies having matured dramatically, there are now numerous high-quality proptech firms that would consider SPACS, including many Fifth Wall portfolio companies.

“We believe SPACs will become an increasingly important, strategically relevant part of the most successful venture capital firms,” he said.

Companies in Fifth Wall’s existing portfolio include co-working provider Convene and custom homebuilder Homebound, as well as less real-estate-related firms including shoe brand Allbirds and Lime scooters.

WeWork, A-Rod and Shaq

SPACs got a publicity boost this past week with the announcement that former NFL quarterback Colin Kaepernick had teamed up with a private equity investor on Mission Advancement Corp, which aims to raise up to $287 million with the goal of acquiring a billion-dollar, consumer-focused company with the potential to “generate a positive social impact”.

Basketball Hall of Famer Shaquille O’Neal’s Forest Road Acquisition Corp announced a deal on Wednesday to take a fitness brand public. And baseball great Alex Rodriguez has filed to raise up to $575 million for a SPAC that will target acquisitions in the “sports, media and entertainment, technology, and health and wellness industries”.

Beleaguered office-sharing startup WeWork is considering going public through a merger with a SPAC after plans for a traditional IPO collapsed in 2019. WeWork’s Chinese rival Ucommune completed a back-door listing on the NASDAQ last November through a reverse-merger with an already-listed SPAC.