Financing the growth of EV
Electric vehicles are the future for the automotive and other transportation industries, but while the electric revolution is upon us, the required infrastructure is not. For the huge potential projected growth of EV adoption to occur, millions of EV charging stations will need to be installed in the coming years. Companies doing work in this space need a lot of capital, but because it is a revolution, these companies do not have very long track records, and their technologies and business models are still being invented—so they need financing from a company like Arena that can look deep and structure deals creatively.
And that’s what Arena did when we invested approximately $45 million, over a series of financings, to provide working capital, a buffer for operating expenses, and acquisition capital to an EV-infrastructure player that we saw had tremendous expertise and potential. Our investment started out small—two financings of only about $3 million each!—but was just what was needed. From an initial enterprise value of less than $25 million when we first funded, the company has zoomed to an enterprise value of multiples of that amount.
This company provides location selection, engineering, installation, testing, and maintenance for equipment in the electric vehicle charging industry, serving not only EV cars and trucks but also the quickly growing shared electric scooter market. There is still some glamour associated with the idea of electric vehicles, but there is also still significant resistance to adopting them because of the lack of infrastructure. The company Arena partnered with aims to make it simple for businesses and consumers alike to switch to EVs and other electrified technology.
One part of their strategy involves what might be the least glamorous aspect of electric vehicles: the maintenance and testing of the EV infrastructure. Our counterparty is an innovator not only in siting and installing EV charging stations, but also in scheduled and emergency inspection and comprehensive EV-infrastructure maintenance services, a segment of the EV market that will grow right along with the infrastructure itself.
The EV charging infrastructure is only one of this company’s specialties. It also has a successful business in telecom infrastructure, including cell tower, small cell, and in-building applications spanning engineering, equipment specification and sourcing, installation, data and software solutions, and service and maintenance. And it has innovated in the segment of public charging for mobile devices with its line of automated, app-driven public kiosks, called Powerbanks, that allow users at hotels, restaurants, universities, and other facilities to quickly borrow portable recharging packs and continue with their activities while their devices charge, untethered by any wall cord.
This investment opportunity was brought to Arena by the president of the company, who invested heavily alongside Arena to maintain significant alignment. An additional recent funding was one that had to be closed within less than two weeks when an alternate lending source fell through. Once again, Arena’s flexibility and ability to efficiently fund both large and small transactions set us apart from many others.
We saw what was possible with a company that is literally unlike any other in its mix of businesses—and we see our partnership with this company as nothing less than helping establish it as a global leader across its sectors.