A Columbia-based data analytics and artificial intelligence firm will become the latest Maryland firm to go public through a merger with a blank check company.
BigBear.ai, which was formed through another merger earlier this year, announced Friday it has entered into a definitive merger agreement with GigCapital4 Inc. (NASDAQ: GIG), a special purpose acquisition company, or SPAC. The transaction comes with an enterprise value of approximately $1.57 billion, and is expected to close in the third quarter of this year.
BigBear.ai was launched in February through the merger of data analytics and artificial intelligence (AI) firm NuWave Solutions and IT services firm PCI Strategic Management. Both those companies were portfolio members of AE Industrial Partners LP, a private equity firm specializing in aerospace, defense and government services, power and specialty industrial markets. The combined company serves customers in the defense, intelligence and commercial sectors, with AI and machine learning (ML) technologies that make use of real-time data to assist in decision-making in complex situations.
Following the SPAC merger, which has been unanimously approved by the boards of both BigBear.ai and GigCapital4, the entity will be named BigBear.ai Inc. and will trade on the Nasdaq. AE Industrial and other existing BigBear.ai investors will own 73% of the shares of the combined company, GigCapital4’s sponsors will own about 6% and public stockholders will own 21%. The transaction is subject to approval by GigCapital4 stockholders, several regulatory approvals and other closing conditions.
BigBear.ai will be the latest company in the region to plan an exit through a SPAC deal in recent months. SPACs, also known as a blank check companies, seek to raise money in the public markets with the express intention of using the cash to acquire or merge with other companies, in effect taking them public without a traditional offering. Other Maryland-born tech firms that have announced impending exits via SPAC deals include seven-year-old cyber firm IronNet Cybersecurity and quantum computing firm IonQ.
BigBear.ai expects to raise about $330 million in net cash through the deal, to facilitate significant growth.
Reggie Brothers, CEO of BigBear.ai, said in statements his company provides a "mission critical service" for its defense and intelligence customers, and also sees a "ripe opportunity" in the commercial market as companies dedicate more of their budget to AI and ML technology to help them "manage risk and capitalize on opportunities."
"We have momentum and multiple paths for growth, and we are excited to be embarking on this next chapter,” Brothers stated.
With the incoming public funds, the company plans to invest in R&D and technology development, expand sales and marketing, accelerate organic growth and make additional mergers and acquisitions.
BigBear.ai noted in its announcement the global AI/ML market is projected to grow from $58 billion in 2021 to $310 billion by 2026, and the company expects its addressable market to expand as well. It plans to target several commercial markets for new growth, including infrastructure, energy, transportation and logistics in the near term, followed by media, health care and financial services later.
The company reported revenue of $140 million for 2020. It projects growing revenue from about $182 million in 2021 to $764 million in 2025, at a 43% compound annual growth rate.
Raluca Dinu, CEO of GigCapital4, stated his firm is "thrilled" to partner with the BigBear.ai team, and "to bring such an exceptionally strong company to the public markets.”
William Blair is serving as exclusive financial adviser to BigBear.ai in this deal, with Kirkland and Ellis LLP serving as legal counsel and Grant Thornton serving as auditor. Oppenheimer & Co Inc. is serving as capital markets adviser and placement agent to GigCapital4, BMO Capital Markets is serving as exclusive financial adviser, DLA Piper LLP is serving as legal counsel and BPM LLP is serving as auditor.
