Youth-Focused Digital Platform FaZe Clan Signs $ 1 Billion SPAC Deal to Go Public


Youth-focused online platform FaZe Clan Inc. is teaming up with a specialist acquisition company to go public with a valuation of around $ 1 billion, the companies said.

Based in Los Angeles, FaZe Clan promotes itself as a leading online gaming company and youth-created brand that targets millennials and Gen Z consumers. Its businesses include esports, merchandise and digital content. The company’s website says FaZe Clan has global reach with a community of around 350 million people on its social media platforms.

FaZe Clan was founded in 2010 and has partnerships with major brands such as McDonald’s Corp. and Totino’s Pizza Rolls, which is owned by General Mills. Inc.,

who hope to reach young consumers.

The company merges with SPAC B. Riley Principal 150 Fusion Corp.

BRPM 12.94%

, a blank check company backed by B. Riley Financial Inc.

RILY 1.03%

The Wall Street Journal previously reported that the two sides were close to reaching a deal.

FaZe Clan is partnering with big companies like McDonald’s that hope to reach younger consumers.


Photo:

FaZe Clan

Fast-growing digital platforms have recently flocked to PSPC deals to raise large sums of money and increase brand awareness by going public. In recent years, sports betting company DraftKings Inc.,

Skillz mobile game company Inc.

and digital media platform BuzzFeed Inc. have completed or announced similar mergers.

“The great opportunity is our direct relationship with the vast audience that we have,” said Lee Trink, CEO of FaZe Clan, in an interview. “It’s a very large and very dynamic community in which we are deeply rooted.

Personalities who create content for FaZe Clan include professional athletes Kyler Murray and Ben Simmons. Singer Pitbull and several other sports and entertainment personalities are among the company’s investors.

Under the SPAC deal, FaZe Clan is raising around $ 120 million through a private equity investment, or PIPE, associated with the merger.

The B. Riley SPAC has approximately $ 170 million. Some or all of this money could also increase FaZe Clan’s cash proceeds from the transaction. Since SPAC investors have the right to withdraw their money before a merger is complete, the liquidity of a SPAC may decrease before a transaction is completed.

Low stock prices often make investors withdraw money. These withdrawals have exploded in recent months amid falling stock prices of many companies that have merged with SPACs, making it more difficult for many companies to complete their mergers by blank check.

A PSPC is a shell company that raises funds and begins trading on the stock exchange to merge with a private company and take it public. The private company then replaced the SPAC on the stock market. PSPC deals have exploded over the past year, in part because they allow startups like FaZe Clan to make business projections that aren’t allowed in traditional initial public offerings.

FaZe Clan predicts that expected sales this year of around $ 50 million will increase rapidly in the years to come. The business is unique because it can grow without spending a lot of money, said Dan Shribman, CEO of B. Riley SPAC.

Private companies are flocking to Special Purpose Acquisition Companies, or SPACs, to bypass the traditional IPO process and get a public listing. The WSJ explains why some critics say investing in these so-called blank check companies is not worth the risk. Illustration: Zoé Soriano / WSJ

“It’s very different from a lot of other explosive growth companies,” Mr. Shribman said.

SPACs were a hot investment at the start of the year, but then their popularity waned after many companies that went public in this way struggled to meet their business goals.

Some excitement has returned to the industry in recent days after former President Donald Trump’s new social media venture announced it would go public by combining with SPAC Digital World Acquisition Corp. PSPC shares rose nearly 10 times in the two days after the deal was announced after the build-up of individual investors. The gains were unprecedented for SPACs and involved a multi-billion dollar valuation for Mr. Trump’s startup.

Write to Amrith Ramkumar at [email protected]

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