Driven by the allure of alternative energy, Rivian has grown from an upstart hybrid-electric startup in 2014 to a venture-backed power brand that has attracted billions in investments from investors who see a market for big-spending family cars and SUVs that don’t sacrifice gas mileage for battery range. Rivian’s competitors on the automotive innovation front include Tesla, BMW, Daimler AG’s Mercedes-Benz and Tata’s Jaguar Land Rover brand. Rivian is now seeking an appraisal of its assets, putting it on the cusp of seeking an initial public offering.
According to an official pre-IPO stock market filing on Monday, Rivian is evaluating “a floating preferred stock transaction that would effectuate a public offering of its shares in an amount larger than $500 million.”
Shares of United Continental Holdings Inc., the parent company of United Airlines, were trading at $96.01 Monday afternoon, just off their all-time high of $98.42 set last week. The prospectus said the company may not sell preferred stock until the IPO, which could later be postponed and could include an equity offering by Rivian. The “preferred stock transaction” could take place as soon as November 2018, according to the filing.
Rivian is based in Ann Arbor, Mich., and has gathered $1.5 billion in private financing and investments. Among the top investors in Rivian are Google parent Alphabet Inc., venture firm Founders Fund, and electric vehicle company BMW. Another firm, also backed by Google parent Alphabet, acquired Rivian last year and became the company’s majority shareholder, serving as advisor and limited partner to Rivian. Alphabet’s group has invested more than $50 million in Rivian. The pre-IPO stock market filing said the company has yet to open a formal financial statement and reported revenue of about $200 million in 2017.
Still, Rivian is near a formal IPO and could be making headway on either front. Its accounting arm will complete quarterly financial statements by November 28, according to the pre-IPO stock market filing. With additional payments to the auditors, the company will likely release a final third-quarter report in January, the filing said.
Rivian said that it is considering selling up to 60 percent of the company’s shares in the IPO, and that it expects to raise more than $5 billion from the offering. The most recent reported valuation was $2.95 billion, based on a stock price of more than $75 as of last week. If it meets the target by raising more than $5 billion, the IPO will be the largest since Uber was valued at more than $70 billion in its 2014 IPO. An IPO will not appear until after the next Supreme Court ruling on the Trump administration’s challenge to an earlier ruling that restricted the ability of states to tax business profits.
An IPO would mean that Mercedes-Benz could lose a major investor. The German carmaker said that it would buy $700 million in Rivian common stock. It said it’s still considering selling its stake, and if it does, it may sell it at a substantially higher valuation. The company would need to take a one-time restructuring charge against the stake if it decides to sell.
The filing also said that Morgan Stanley, Credit Suisse and JPMorgan are coordinating the share sale, and they will serve as “well-known traders and investment bankers.”
Also on Monday, in a related filing, Rivian said it was merging with Otto, a same-sex startup founded by two former Google executives that makes autonomous vehicles. Otto said it would receive 20 percent of Rivian’s newly issued voting stock.
Rivian recently announced that it plans to unveil its prototype at the International Consumer Electronics Show in January. Rivian also has secured permits to test autonomous vehicles on public roads in Arizona and Michigan. The company said it expects to show “a number of key new technologies that it plans to launch as commercial products in 2020.”
The rest of Rivian’s list of filings includes five pages describing “potential risks and uncertainties” that investors should consider when considering whether to invest in Rivian.