Deal analysis: Wheels Up worth $2bn as it merges with SPAC

“We are just getting started,” Kenny Dichter, founder and CEO of Wheels Up, told Corporate Jet Investor on the day the company agreed to go public by merging with a Special Purpose Acquisition Company (SPAC). “We are excited but this deal is just the start.”

 The merger with Aspirational Consumer Lifestyle gives Wheels Up an enterprise value of $2.091bn. This values the fast growing business aviation company, which has not made a profit, at 1.8 times its forecast 2022 revenue. The company had more than 9,000 members at the end of 2020. This was up from 5,700 in 2019.

The Aspirational Consumer Lifestyle SPAC was launched by Ravi Thakran, former group chairman of LVMH and an experienced private equity investor. It floated in September 2020. L Catterton Asia, a global private equity firm focused on companies selling direct to consumers, is a minority shareholder.

Wheels Up says that the transaction will give the company $750m in cash.

The SPAC raised $240m when it floated in September 2020. A group of investors including T. Rowe Price, Fidelity, Franklin Advisors, Durable Capital, HG Vora Capital Management, Third Point, Luxor Capital and Monashee have agreed to provide a further $550m private investment in public equity (PIPE). All the existing shareholders are also rolling their existing investment into the new merged company.

When the deal closes, existing investors will own 68.9% of the company and PIPE investors 20.1%. The SPAC’s shareholders will own 8.8% and the SPAC’s sponsors 2.2%.

“Aspirational are the perfect fit with us,” said Dichter. He has often talked about selling other products to Wheels Up’s members – including experiences, events, yachting, credit cards and luxury products. Thakran and his colleagues have strong experience in growing large luxury brands.

Wheels Up is also looking to expand internationally in Europe, Asia and Latin America. It delayed a European launch a few years ago. “We have always said that we want to build a global digital marketplace and Ravi and his team are operators who have done this before,” said Dichter.

Some of the proceeds from the deal will be used to pay down debt that financed its 170-strong owned and leased aircraft fleet. It is also looking to buy more companies. Since 2019, Wheels Up has acquired TMC Jets, aviation software company Avianis, Delta Private Jets and Gama Aviation Signature US. “We are still looking at opportunities and, as a public company, we don’t necessarily have to use cash, we have our own shares as currency now,” said Dichter.

The cash will also be used to keep investing in technology to run its marketplace platform. Wheels Up now employs more than 100 people focused on technology and data science.

When the deal closes, Wheels Up, which will have the ticker symbol NYSE: UP, will be the only pure business aviation company on the exchange.

“We have got great investors and we – and others in business aviation – are in the right space at the moment,”  said Dichter. Wheels Up met with several SPACs which wanted to merge with the company.

“This transaction validates the fact that institutional investors and public markets really have belief and conviction in this space,” said Nick Fazioli, Jefferies’ MD and head of Commercial Aerospace and Aviation, in a separate call with Corporate Jet Investor. “Kenny and his team have proved how it is possible to grow the business and have been a winner from the pandemic.”

Fazioli highlighted the merger of helicopter platform Blade, which is merging with a SPAC launched by KSL Capital Partners (investors in the Ross Aviation FBO company).

“We are seeing significant interest from companies looking to invest equity or lend debt to business aviation companies and this may encourage others and lead to more consolidation of the industry,” said Fazioli.

This was the 16th time that Jefferies has advised Wheels Up on a transaction. “We are really excited to have taken Wheels Up from inception to IPO,” added Fazioli.

Dichter ended: “It is an exciting time for the industry and for Wheels Up. And, I really mean it, we are just getting started.”

Kenny Dichter on Wheels Up at CJI Americas 2020

Nick Fazioli speaking about investing in business aviation at CJI Americas 2020

Also read Wheels Up going public with aspiration consumer lifestyle SPAC For a few billion dollars more: Business Aviation is hot, hot, hot in 2021 SPACs and business aviation: Kenn Ricci launching a SPAC  Deal summary Enterprise value: $2.091bn SPAC Cash: $240m PIPE: $550m Existing investor rollover equity: $1.885bn Total capital: $2.675bn Financial advisers to Wheels Up:  Goldman Sachs, Jefferies, Morgan Stanley. Legal advisers to Wheels Up: Arnold & Porter Kaye Scholer Financial advisers to Aspirational: Connaught, Credit Suisse Legal advisers to Aspirational: Skadden, Arps, Slate, Meagher & Flom