Fisker raises $150mn to aid production ramp

Pureplay issues $170mn convertible note at 12pc discount

Fisker raises $150mn to aid production ramp
Fisker is improving its short-term liquidity

California EV start-up Fisker has collected c.$150mn from an unnamed pre-existing investor. This capital is in the form of a $170mn convertible note, with 0pc interest but priced at a 12pc discount to face value — i.e. Fisker would only see $149.6mn but owe $170mn — and maturing in 2025.

The announcement marks the completion of a previously disclosed transaction from July this year between the automaker and one of its institutional investors. In the 2020 special purpose acquisition company (Spac) process that took Fisker public, investors included US investment firm Moore Strategic Ventures, asset managers Alliance Bernstein and Apollo Global Management, and funds managed by investment heavyweight Blackrock and fund manager Federated Hermes Kaufmann.

The transaction may reflect more solid investor confidence in Fisker than in fellow California-based EV start-up Faraday Future (FF), which recently had to address concern over its stock dipping to levels that make it harder for institutional investors to participate. Admittedly, the two firms are targeting different segments, with Fisker seeking mass-market appeal and FF chasing a super-high-end niche.

The boost to Fisker's coffers also comes at an opportune time as the company looks to increase initial production and to enter the Indian market later this year, followed by China in 2024. While CEO Henrik Fisker told EV inFocus last month that sales of only 100 vehicles are initially planned for India this year, he also revealed that the company is planning to manufacturer its Ocean SUVs in China as early as next year.

"It is a necessary move [which is] probably neutral for the stock. The first ramp is always expensive — even with Fisker outsourcing the manufacturing. They need to ramp the sales, delivery, and service etc, which takes time and money," says consultancy firm ESP Equity Research.

The firm began production in Q2 and has now reached 300 units/day, while the Magna Steyr plant in Austria that does Fisker's manufacturing has a capacity of 70,000/yr. Expansion into China is also likely to come with heavy upfront cost, with the company's to-do list including brand building and initial import agreements.

These notes will also allow the company to offer further convertible notes "resulting in additional gross proceeds of up to $550mn to Fisker", the company says, an amount which represents two thirds of the $822mn cash levels that the company reported in its Q2 results.

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