Cepton's Partner And Shareholder Koito To Invest $100M To Commercialize Lidar Solutions

Cepton, Inc CPTN, a Silicon Valley innovator and player in high-performance lidar solutions, agreed to a $100 million investment from its long‐term automotive Tier 1 partner and current shareholder, Koito Manufacturing Co, Ltd 

What Happened? As previously reported, the investment will help fund Cepton's next growth stage as it scales its lidar solutions for mass deployment. 

Under an agreement dated October 27, 2022, which Cepton's board has unanimously approved, Koito will purchase $100 million of convertible preferred stock, with a purchase price of $1,000 per share. 

The Preferred Stock will be convertible, beginning on the first anniversary of the issue date, into shares of Cepton's common stock, representing a 10.00% premium to Cepton's volume‐weighted average price over the trailing 20 trading day period ending on October 26, 2022. 

The initial conversion price also represents a 13.4% premium to Cepton's closing price on October 26, 2022, and a 7.0% premium to Cepton's average closing price over the past five trading days.

At Cepton's election, the Preferred Stock carries a 4.250% per annum dividend if paid in kind or a 3.250% per annum dividend if paid in cash, in each case paid quarterly in arrears.  

Why Does It Matter? In 2017, Cepton and Koito had a strong history of collaboration, and this marks Koito's third investment in Cepton since 2020. 

As a direct result of their partnership, Cepton and Koito won the industry's most significant known ADAS lidar series production award. 

"This investment solidifies Cepton's financial position and allows us to continue our execution excellence as we focus on commercialization and mass-market deployment of our lidar sensors," said Dr. Jun Pei, Cepton's Co‐Founder and CEO. 

"This investment serves as a testament to our commitment towards Cepton and bringing lidar‐based ADAS and AV systems to everyday vehicles," said Mr. Michiaki Kato, Koito's President. 

The investment will likely close in the first quarter of 2023. 

ICR Capital LLC served as the exclusive financial advisor to Cepton, and O'Melveny & Myers LLP served as legal counsel to Cepton. 

SMBC Nikko served as the exclusive financial advisor to Koito, and Davis Polk & Wardwell LLP and Nishimura & Asahi served as legal counsel to Koito.

Price Action: CPTN shares closed lower by 7.69% at $2.28 on Wednesday.