Sunlight Financial Strikes Deal With Apollo SPAC, Chamath Palihapitiya PIPE

A solar based company lands a SPAC deal on Monday from an impressive list of financial backers.

The SPAC Deal: Sunlight Financial is going public with Spartan Acquisition Corp II SPRQ. This is the second Spartan Acquisition SPAC from Apollo Global Management APO. The first SPAC from the group brought Fisker FSR public.

The deal values the company at $1.3 billion. A $250-million PIPE is funded by Chamath Palihapitiya, BlackRock, Franklin Templeton and Neuberger Berman.

Current Spartan Acquisition Corp II shareholders will own 26% of the new company.

About Sunlight Financial: The company provides B2B2C (business to business to consumer) services for the residential solar market. Sunlight Financial partners with solar contractors and consumers onthe  financing of solar projects.

Sunlight Financial has a proprietary technology and deep contract network that provide instant credit decisions and affordable loans to homeowners. The company helps with loan underwriting, processing and funding. The contract network includes over 800 partners.

The company has funded over $3.5 billion in solar loans on more than 100,000 residential deals.

Related Link: 10 SPACs Trading Under $11 For Investors To Consider In 2021

Growth Ahead: The residential solar market is part of the fast growing clean energy market and has a total addressable market size of $11 billion. The residential solar market is only 3% penetrated and could have room for rapid growth.

The price of solar costs have been going down over the last five years while electricity prices have risen an average of 2.3% annually from 2005 to 2019.

In 2019, Sunlight Financial expanded into the home improvement segment. This segment is expected to provide meaningful revenue contributions beginning in 2023.

The home improvement segment could offer resiliency products like potable water, high efficiency heaters and artificial turf, according to Palihapitiya.

This market segment is worth $400 billion, greatly increasing the total addressable market size for Sunlight Financial.

Financials: With its capital light business model, Sunlight Financial is a profitable company generating significant free cash flow.

The company is estimating fiscal 2021 adjusted EBITDA of $60.2 million.

Funded loan volume for 2021 is seen hitting $2.7 billion for the company. The estimate for funded loan volume in fiscal 2022 is $3.3 billion.

Revenue is 2020 is estimated at $92 million. The company expects revenue to hit $123 million in fiscal 2021, $157 million in fiscal 2022 and $199 million in fiscal 2023.

SPRQ Price Action: Shares of Spartan Acquisition Corp II were up 27% to $15 at the time of publication. Shares traded over $20 in early premarket trading Monday.