Munich The heating app provider Tado wants to go public with the help of a Spac deal. “We can provide the company with solid financing for accelerated growth over the next few years,” Tado CEO Toon Bouten told Handelsblatt on Monday.
Tado deals with the networking of technology in apartments, the so-called “smart home” area. The start-up has developed an app that can be used to intelligently control heating and air conditioning.
Tado boss Bouten wants to increase the company’s sales to 500 million euros by 2025, as he said when the stock exchange plans were announced. According to industry estimates, the company generated sales in the mid double-digit million range last year.
The smart home start-up wants to go public through the proverbial back door: In a Spac deal, an empty company shell without its own business – known as a “special purpose acquisition company” (Spac for short) – goes public and then merges with an unlisted company. So Tado wants to be listed in the fast track.
Tado plans to merge with the stock exchange vehicle “GFJ ESG Acquisition I”. A letter of intent has already been signed. Tado is to be valued at around EUR 450 million in the course of the transaction. “We assume that the company will receive around 180 million euros in growth capital,” says ex-Klöckner boss Gisbert Rühl, who leads GFJ.
Also on board is the real estate entrepreneur Florian Fritsch, who, among other things, was an early Tesla and Delivery Hero invested. Chairman of the GFJ supervisory board is serial founder Josef Brunner, who sold his IoT company Relayr to Munich Re for $300 million two years ago.
The Spac hype is flattening out
A real spac hype could be observed on the stock exchanges last year: almost 600 such vehicles went public worldwide, most of which are still looking for takeover targets. However, disillusionment has set in on the scene. The stock exchange shells found it increasingly difficult to find enough investors for the standard capital increase in the run-up to the merger with the target company.
In addition, many early investors use their right of withdrawal when it becomes clear which specific company will be listed on the stock exchange. This repeatedly reduced the hoped-for issue proceeds significantly.
“The problem was that, especially in the USA, many companies that didn’t have a functioning business model wanted to go public with a Spac deal,” says GFJ boss Rühl. In addition, the so-called sponsors in the USA were often not strategic investors and rather wanted to make quick profits.
In the case of Tado it is different. “We want to accompany Tado in the long term,” says Rühl. The company has a functioning technology and is the market leader in a future-oriented field. “The business model hits the nerve of the times. Tado is helping to do something about skyrocketing heating costs and climate change.”
If everything works out and not too many Spac investors withdraw their money, Tado SE could be listed on the stock exchange by summer. Rühl is confident: “It is important that you leave room for improvement in the assessment.”
Bouten announced that Tado wants to play an active role in the consolidation of the smart home industry with the help of the capital proceeds and the new possible acquisition currency shares. “We have seen very good growth of over 50 percent in recent years and want to further expand our market share.”
At the end of last year, the online sporting goods retailer Signa Sports United made the leap to the stock exchange in what was the largest Spac deal to date in the German-speaking region. The company of the Signa Group of the Austrian investor René Benko received around 500 million euros in fresh capital and was valued at a good three billion dollars on the stock exchange.
In Germany, too, Spacs are still a popular means of a speedy IPO, despite the leveled off hype. The venture capitalist 468 Capital wants to launch a new shell company on Thursday and collect 250 million euros in the process. 468 Capital is managed by ex-Rocket Internet CEO Alexander Kudlich, former Rocket Internet investor Ludwig Ensthaler and series founder Florian Leibert.
Possible merger partners are European companies from the areas of mobile internet and cloud software. Last year, 468 Capital floated its first Spac, which merged with Boxine, the manufacturer of the Tonies toy figures, to form “Tonies SE” in August.
“Although disillusionment also set in in the Spac scene last year, Tonies has developed far better than the market,” Kudlich told the Handelsblatt. “For investors to continue to invest in Spacs in the future, we have to offer companies that will grow over the next five to ten years, and do so sensibly.”
Customers should save 22 percent on heating costs with smart thermostats
Of course, this is exactly what newcomer Tado wants to achieve. The company’s app can detect when an employee is leaving work and heading home, and preheat the home in advance. The controller also recognizes via the mobile phone when the residents leave a room or the house again. Sleep times are taken into account, as is the position of the sun.
Customers should save an average of 22 percent on heating costs. For this, however, users also need the networked, smart thermostatic valves from Tado. According to the company, it has sold more than two million units to date.
The company sees itself as the European market leader in this area. But Tado has a lot of competition. Google acquired competitor Nest in 2014 for a staggering $3 billion, but has so far played a rather subordinate role on the market in Europe.
In addition, the heating industry is also pushing into Internet of things, albeit sometimes quite late. Vaillant has developed an app for heating control, for example, which users can use to activate predefined profiles such as “at home”, “night” or “away”.
After the acquisition of Awattar, Tado customers can buy their own electricity
Shortly before the announcement of the IPO Tado announced the first acquisition in the company’s history. With the takeover of Awattar – a specialist in flexible electricity marketing – customers will be able to buy electricity more cheaply in the future. According to industry estimates, Awattar recently achieved double-digit million sales.
With the help of the IT platform from Austria, Tado users can, for example, charge their electric car or the buffer storage tank of the heat pump exactly when electricity is particularly cheap, for example because there is a lot of wind or solar energy. In phases when electricity is very expensive, the charging process can be interrupted for a while.
With the IPO, CEO Toon Bouten will retire to the supervisory board, which Rühl is to lead. A few years ago, Tado founder Christian Deilmann brought Bouten into the company as CEO for further commercialization. Bouten used to work at Compaq and Phillips.
After the IPO, Tado needs a CEO to lead the company over the next few years, Bouten said. At the age of 63, he is making room for the next CEO. However, continuity is maintained because the founders remain on the board. The new Tado CEO will be Oliver Kaltner, who currently heads the Fritsch Group.
More: Tado also wants to offer customers cheap electricity purchases in the future
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