Hypebeast SPAC Deal: Inside The Company Tom Brady, Kevin Durant And Others Are Investing In

A SPAC merger agreement announced Monday brought some additional fanfare with several notable athletes and celebrities among the investors in the company’s PIPE. Here’s a look at the company and deal.

The SPAC Deal: Hypebeast announced a SPAC merger with Iron Spark I ISAA Monday morning. The deal values Hypebeast at a pro forma equity valuation of $534 million.

Among the PIPE investors in the SPAC merger are Tom Brady, Naomi Osaka, Kevin Durant, Rich Kleiman, Tony Hawk, Jonah Hill and Adam Levine. Airbnb Inc ABNB co-founder Joe Gebbia is also among the PIPE investors.

The company expects to be dual-listed on the Nasdaq and the Hong Kong Stock Exchange. The expected ticker for the Nasdaq listing is HYPE with an expected closing date in the third quarter of 2022.

Iron Spark public shareholders will own 31.2% of the company after the merger assuming no share redemptions. Public Iron Spark shareholders will continue to receive a 5 cent quarterly dividend until the deal closes.

About Hypebeast: Founded in 2005, Hypebeast sits at the intersection of growing luxury, sportswear and lifestyle brands. The company operates within the digital media and e-commerce sectors and has more than 26 million followers worldwide across multiple social media platforms.

The company was founded as a sneaker blog and is led by its founder Kevin Ma, who serves as the chairman and CEO.

Hypebeast has 18 million monthly unique visitors and a loyal user base in the Gen Z and millennial age demographics.

The company operates with three divisions of HYPEMEDIA (editorial, social media), HYPEMAKER (creative production agency) and HBX (e-commerce, omnichannel).

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Growth Ahead: Hypebeast sits in the global apparel and footwear market that is worth $1.6 trillion worldwide. Strong partnerships with more than 250 global brands for e-commerce and media are expected to help fuel the company’s growth.

The company said it will use proceeds from the SPAC merger for investments in omnichannel media and e-commerce growth.

Trevor Edwards, who was previously president of Nike Inc NKE, will join the board of directors for Hypebeast.

“Hypebeast has built a powerful connection amongst its readers and consumers globally who want to discover the undiscovered and learn about the up-and-coming — and they wholeheartedly trust in the brand to provide that,” Edwards said. “I look forward to collaborating with Hypebeast as they bridge communities of creators and consumers from around the world.”

The company is expected to open its flagship New York City retail store in the second half of 2022. The location will offer retail space with office and studio space for editorial and the agency to help make the location profitable.

Financials: Hypebeast reported revenue of $112 million in fiscal 2021, up 29% year-over-year. The company has posted compounded annual growth of 34% from 2015 to 2021.

The company was profitable in fiscal 2021 and enjoys a 22% EBITDA margin and 59% gross margins.

In fiscal 2020, revenue was split as 31% media, 28% e-commerce and 41% agency.

For the media and agency division, 32% of revenue was from China and 26% from the U.S. in fiscal 2020. The U.S. represented 26% of the e-commerce division with Taiwan making up 18% and China 8%.

ISAA Price Action: Iron Spark shares are up 1.80% to $10.18 on Monday morning at publication.

Photo: Arnie Papp via Flickr Creative Commons