PropTech SPAC Parabellum Acquisition Corp. (OTC:PRBM) announced last week that energy harvesting IoT specialist, EnOcean GmbH had terminated their merger agreement.
This Research Note highlights the company background to this announcement and our overall view of PropTech SPAC companies in the smart buildings market.
EnOcean, based in Germany, looked well-positioned to become a successful publicly listed company. The firm is a pioneer of energy-efficient IoT devices for commercial buildings and smart spaces.
It maintains extensive OEM partnerships with more than 350 product manufacturers and is a founding member of EnOcean Alliance, a non-profit international association of companies that promotes interoperable eco-systems for smart homes, smart buildings and smart spaces with over 300 members. According to the company, Enocean products are deployed in over 1 million buildings.
In October 2022, EnOcean announced the acquisition of the assets of Renesas’ edge computing solutions business, which includes much of what remains of the original IoT pioneer, Echelon. Their combined solution, including servers and IoT Access Protocol (IAP) software, enables customers to leverage existing data that is already being generated in their buildings, machines, or other devices for a wide range of applications.
The solution enables understanding, control, interaction, and optimisation of buildings and devices. Insights gained from sensor data can be applied directly to drive actions to improve efficiency.
The 2022 revenue mix for the combined EnOcean/acquired edge computing solutions product offerings is:
- 47.5% - gateways & actuators
- 33% - switches
- 13% - sensors
- 6.5% software & tools
While Special purpose acquisition companies (SPACs) have proved a popular route for companies to list on the stock market without the rigmarole of a traditional IPO process, more often than not, smart buildings companies using these reverse mergers have either failed to complete their proposed deals or struggled since completing it.
Acquisitions were an important strategic rationale for the SPAC merger. Raoul Wijgergangs, CEO of EnOcean, said at the time “We are seeking ways to accelerate growth beyond organic developments. For that reason, EnOcean acquired the smart-server business from Renesas Electronics Corporation on October 1, 2022, and is pursuing a strategy for additional acquisitions”.
The merger, which valued EnOcean at a total enterprise value of $167 million, was expected to provide EnOcean with growth capital to expand deployment of its technology and provide capital for strategic acquisitions. It is therefore likely to be seeking alternative investment in the company, whether from private equity, venture capital or debt financing.
With this latest PropTech SPAC failure following on from Brivo and Tado and the poor Post-IPO performance of View, Latch and others, our assessment is that the “SPAC door” to IPO has now more or less closed to PropTech companies.
This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.