Stem, Inc to go public with Star Peak Energy (STPK) SPAC combination

Star Peak Energy (STPK) and Stem, Inc has announced that they plan on combining to bring Stem, Inc to the public markets. Stem is the world leader in AI energy storage, helping businesses develop and implement energy strategies of the future.

  •  Stem, Inc. to become publicly listed through business combination with Star Peak Energy Transition Corp. (NYSE: STPK).
  • Founded in 2009, Stem is an energy storage leader that offers customers a complete solution of integrated battery storage systems, network integration and battery optimization via its proprietary AI-driven software platform called Athena™.
  • Stem delivers significant customer value by lowering energy costs, stabilizing the grid, alleviating intermittency and reducing carbon emissions – addressing electric grid constraints and driving the rapid global transition to zero carbon, renewable generation.
  • Transaction to provide up to $608 million in gross proceeds, comprised of Star Peak’s $383 million of cash held in trust, assuming no redemptions, and a $225 million fully-committed common stock PIPE at $10.00 per share, including investments from funds and accounts managed by BlackRock, Van Eck Associates Corporation, Adage Capital Management, L.P., Electron Capital Partners, and Senator Investment Group.
  • Following the expected first quarter 2021 transaction close, the combined company will have an estimated equity value of approximately $1.35 billion and will remain listed on the New York Stock Exchange under the new ticker symbol “STEM.”
  • All Stem shareholders will roll 100% of their equity holdings into the new public company.
  • Transaction positions Stem to capitalize on significant growth opportunities, expand globally and continue to advance its Athena™ software platform.
  • Stem’s energy storage systems address a $1.2 trillion market opportunity, and offers investors a unique ESG opportunity to invest in a pure play clean energy company helping to revolutionize the electric grid.

Stem builds and operates the largest digitally connected energy storage network for our customers. Their world class AI platform optimizes the value of our customers’ energy assets and facilitates their participation in energy markets, yielding economic and resiliency benefits while accelerating renewable adoption.

The company has pioneered an intelligent approach to energy management and technology services. Our innovative team leads the industry in developing and deploying artificial intelligence (AI)-powered energy storage that controls energy costs, while enhancing sustainability and resilience.

The company is currently backed by some of the biggest players like:

  • Activate Capital
  • Magnesium Captial
  • GE Ventures (General Electric)
  • Constellation

Stem Investment Highlights:

  • Large addressable market and strong macroeconomic tailwinds – the global energy storage market is expected to increase approximately 25-fold by 2030, driven by the convergence of two technologies (i) low-cost renewable generation and (ii) rapid reduction in battery costs and improving efficiency. The energy storage market is expected to grow materially faster than solar and wind generation.
  • Market and technology leader:
    • More than 600 MWh of storage capacity commissioned since 2014.
    • Over 900 systems operating or contracted with Stem’s proprietary Athena™ software platform, in more than 200 cities and representing approximately 1 GWh of storage capacity.
    • 75% market share in the California commercial and industrial storage market, the largest energy storage market in the U.S.
    • First mover AI software platform has operated globally with over 40 utilities and 16 million runtime hours across its customer base.
  • Balance sheet supports significant market expansion – strong balance sheet with approximately $525 million of cash to fully finance all U.S. and international forecasted growth.
  • Highly visible growth – strong backlog and long-dated recurring software revenue streams enhance near-term revenue visibility.
  • Capital light business model – AthenaTM AI-driven software leads to strong operating leverage with low expected capital intensity.
  • Pure play clean energy company with attractive ESG characteristics – Stem facilitates rapid adoption of renewables and supports customer sustainability goals.

Transaction Overview

The business combination values the combined company at a $1.35 billion pro forma equity value, at a price of $10.00 per Star Peak share and assuming no redemptions by Star Peak shareholders. The transaction will provide $608 million of gross proceeds to the company, assuming no redemptions, including a $225 million fully committed common stock PIPE at $10.00 per share anchored by existing and new investors, including funds and accounts managed by BlackRock, Van Eck Associates Corporation, Adage Capital Management, L.P., Electron Capital Partners, and Senator Investment Group.

The Boards of Directors of each of Stem and Star Peak have unanimously approved the transaction. The transaction will require the approval of the stockholders of both Stem and Star Peak, and is subject to other customary closing conditions, including the receipt of certain regulatory approvals. The transaction is expected to close in the first quarter of 2021. All Stem shareholders will roll 100% of their equity holdings into the new public company.

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Tim Rolle
Tim Rolle

Investor of 6 years and Managing Editor of Money Midnight, a news outlet focused on highly profitable investment ideas and bold underground research.

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