TPG Pace Beneficial Finance (NYSE:TPGY) stock is unfortunately attached to a desire for special purpose acquisition companies (SPACs) that has lost a lot of their luster since February.
With speculative stocks in retreat, many investors have turned back to safer defensive names.
However, with SPACs in a sharp downtrend, it creates a potential opportunity to buy some of the better offerings that have turned into collateral damage.
TPG Pace is expected to merge with EVBox soon. When TPG announced the deal in February, shares spiked to $30. Now, though, the excitement has cooled, and TPGY stock trades for around $15.
Unlike many SPACs, however, there’s still a good bullish case here. Here’s why you might consider buying the dip on TPGY.
EVBox and TPGY Stock
EVBox is an electric vehicle (EV) supply equipment company that manufactures EV charging stations. It has a distribution network for getting these to end customers. It also is working on ancillary things, such as software, to help add value throughout the EV charging supply chain.
The company hails out of Europe and thus has gotten less attention than rivals such as ChargePoint (NYSE:CHPT) and Blink (NASDAQ:BLNK). However, EVBox is global in scale and has offices in more than a dozen cities, including some in the U.S. So don’t let geography alone keep you from warming up to the EVBox story.
A lot of SPACs are in the hopes and dreams business. Give them money today and, if everything works out, maybe they’ll start generating revenues and profits in, say, 2025. That was enough to satisfy the market in February. Now, though, with SPACs in a funk, investors are getting more selective about which deals they’ll put money into.
The good news is that EVBox is already delivering strong results right now. The company is looking at $146 million in revenue this year, with that jumping to $273 million in 2022. In a world of SPACs with scant current operating results to point to, EVBox stands out in a good way.
It’s done this primarily through execution in its core business. To that end, EVBox has a global installed base of 190,000 charging points already. That’s quite an impressive number, given that the industry is still in its early stages.
Pace Is a Quality Sponsor
There is another thing that sets this deal apart from the average SPAC. It’s that TPG Pace is a proven SPAC sponsor. It made its first SPAC way back in 2015 and has completed five SPAC IPOs so far.
More broadly, TPG has brought 55 companies to market over the past decade when counting other offering types in addition to SPACs. According to Dealogic, TPG is the single most active deal sponsor over that time span.
Past TPG SPAC deals include Magnolia Oil & Gas (NYSE:MGY) and Accel Entertainment (NYSE:ACEL). While neither of these have been home-run deals, both are trading up from their initial $10 SPAC offering price. Most pre-2020 SPACs have struggled. So Pace, by comparison, having multiple deals in positive territory is a good sign.
So many sponsors are trying to cash in quickly on the recent SPAC boom. By contrast, it’s impressive to see firms that have been in the arena for a while and which have developed a SPAC track record prior to the recent gold rush mentality that has overtaken the sector.
TPGY Stock Verdict
EVBox is a high-quality offering, as far as SPACs go. Due to being international in nature, it hasn’t attracted as much attention as the U.S. charging peers. However, don’t discount it simply for that. I’d much rather own EVBox than Blink, and it’s competitive with ChargePoint as well.
Does that mean that TPGY stock is necessarily going to be a big winner? No. The charging industry is still in its infancy and we don’t have a great sense of how the long-term economics will look yet.
However, if you’re comfortable with that uncertainty, EVBox looks like one of the better ways to get exposure to the theme, and given the big selloff in TPGY stock as of late, this could be a decent entry point.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.