Financial Technology company Acorns Grow Inc. plans to go public through a merger with a blank-check company that would value the digital investment platform at about $2.2 billion.
Pioneer Merger Corp.
a special-purpose acquisition company (SPAC), announced its intention to merge with Acorns in a Thursday filing with the Securities and Exchange Commission. The deal has been approved by the boards of both companies and is expected to close in the second half of the year.
Acorns runs an platform that offers checking, investment, and retirement accounts. The company charges monthly fees of $1, $3, or $5 for its services, depending on the features provided, and offers a function that lets people round up the spare change from their everyday spending to be put toward investments.
The company had about 4 million subscribers as of the end of the first quarter and is targeting 10 million by 2025. Of the Acorns subscriber base, half are parents and 60% are first-time investors, according to a presentation included in the SEC filing.
Acorns sees a big market opportunity in serving customers with household incomes below $100,000. These individuals are underserved by traditional financial-services companies, according to Acorns, and the company estimates that this cohort in the U.S. represents more than $100 billion in potential annual revenue.
Growth drivers in the near term include custom portfolios and portfolios with a focus on environment, social, and governance (ESG) factors, per the filing.
The company generated $71 million in revenue for the 2020 calendar year, up from $44 million a year earlier.
Upon completion of the SPAC merger, Acorns intends to trade under the ticker OAKS, a reference to part of the company’s business description: “From Acorns mighty oaks do grow.”
SPAC mergers have proven increasingly popular over the past two years, though SPAC deals trailed off in April amid increased regulatory scrutiny.